The trade or business of selling merchandise where substantially all of the merchandise has been received as contributions or gifts is not subject to the unrelated business income tax, but is subject to the tax on feeder organizations.

Question

Quizplus · Accepted Answer

The trade or business of selling merchandise received as contributions or gifts is generally not subject to unrelated business income tax if it is conducted by a tax-exempt organization, as it is considered related to the organization's exempt purpose. It is not subject to the tax on feeder organizations, which applies to organizations that primarily operate for profit.

The Trade or Business of Selling Merchandise Where Substantially All