Authority: IC 6-8.1-3-3
Affected: IC 6-3-2-3.1
Sec. 68.
Unrelated Business Income of Exempt Organizations. Under IC 6-3-2-3.1, exempt organizations are subject to adjusted gross income tax and supplemental net income tax on income derived from an unrelated trade or business as defined in Internal Revenue Code §513. This section does not apply to the United States and its agencies and instrumentalities, nor to the State of Indiana, a state agency as defined in IC 34-4-16.5-2[IC 34-4 was repealed by P.L. 1-1998, SECTION 221, effective July 1, 1998.], nor a political subdivision of the state as defined in IC 34-4-16.5-2[IC 34-4 was repealed by P.L. 1-1998, SECTION 221, effective July 1, 1998.], all of which are exempt from adjusted gross income tax on all income. This section does apply to all other exempt organizations such as churches, fraternal organizations and professional societies.
An "unrelated trade or business" is one the conduct of which is not substantially related (aside from the needs of income or the use of the profits) to the performance by the exempt organization of the function constituting the basis for which it was granted exemption. However, under Internal Revenue Code § 513 the term does not include income from a trade or business:
45 IAC 3.1-1-68