While in general your accountant/auditor is right, there are many exceptions. Once a year type events sometimes are included in those exceptions. Generally the IRS looks at a number of criteria for UBIT. One is that 'it be regularly carried on'. While there can be exceptions (it is the IRS after all), an activity 'conducted no more often than annually will be regarded by the IRS as not regularly carried on'. So, your activity may fit that definition. There are other ways to deal with this as well. Your institution can lump all it's potential UBIT together, both income and expenses. There are some other rules regarding production costs and loses. You might consider having an attorney with an expertise in non-profit law give you a reading on this. They tend to have more expertise in this stuff than many accountants and even auditors. Hope this helps and doesn't confuse. Barry Pilson ------- Barry Pilson, CAE Director, Marketing American Association of Museums 1575 Eye Street NW Washington, DC 20005 [log in to unmask] Tel: 202.218.7672 Fax: 202.756.2890 www.aam-us.org AAM100 1906-2006 Leadership to the Field, Service to the Public -----Original Message----- From: Museum discussion list [mailto:[log in to unmask]] On Behalf Of Catalina Island Museum Sent: Tuesday, July 05, 2005 2:21 PM To: [log in to unmask] Subject: [MUSEUM-L] UBIT question--advertising income Hi! Our new accountant/auditor is telling us that advertising income is subject to Unrelated Business Income Tax. For us that revenue comes in once a year when we sell ads in an event program. This past year we sold $6400 in ads and our printing costs were about 1/2 of that. He says we can't count staff time as an expense...only the hard costs of printing. Has anyone dealt with this before? I'm also surprised that no other auditor has ever pointed this out before...so I don't know if this is a new rule or if they just overlooked it. Would appreciate any feedback you have! Thanks! Stacey Otte Executive Director Catalina Island Museum ========================================================= Important Subscriber Information: The Museum-L FAQ file is located at http://www.finalchapter.com/museum-l-faq/ . You may obtain detailed information about the listserv commands by sending a one line e-mail message to [log in to unmask] . The body of the message should read "help" (without the quotes). If you decide to leave Museum-L, please send a one line e-mail message to [log in to unmask] . The body of the message should read "Signoff Museum-L" (without the quotes). ========================================================= Important Subscriber Information: The Museum-L FAQ file is located at http://www.finalchapter.com/museum-l-faq/ . You may obtain detailed information about the listserv commands by sending a one line e-mail message to [log in to unmask] . The body of the message should read "help" (without the quotes). If you decide to leave Museum-L, please send a one line e-mail message to [log in to unmask] . The body of the message should read "Signoff Museum-L" (without the quotes).