Research Problem 1. Wonderful Wilderness, Inc., is a tax-exempt organization. Its mission is to "make the world a greener place through education, research, exploration, and restoration." Martín Morales, the chief financial officer, presents you with the following information. Wonderful Wilderness raises funds to support its mission in a variety of ways, including contributions and membership fees. As part of this effort, Wonderful Wilderness develops and maintains mailing lists of its members, donors, catalog purchasers, and other supporters. Wonderful Wilderness holds exclusive ownership rights to its mailing lists. To acquire the names of additional prospective members and supporters, Wonderful Wilderness occasionally exchanges membership lists with other organizations. In addition, Wonderful Wilderness permits other tax-exempt organizations and commercial entities to pay a fee, identified in an annually updated schedule, to use its mailing lists on a one-time basis per transaction. Martín is aware that the Federal income tax law applies a UBIT. He is also aware of the § 512(b)(2) provision that excludes royalties from the UBIT. An IRS agent has raised the issue that the revenue from the use of the mailing lists by other entities may be taxable as unrelated business income. Martín wants you to research this issue. Write a letter to Martín that contains your findings, and prepare a memo for the tax research files. Wonderful Wilderness's address is 100 Wilderness Way, Pocatello, ID 83209.
Research Problem 1. Wonderful Wilderness, Inc., is a tax-exempt organization. Its mission is to "make the world a greener place through education, research, exploration, and restoration." Martín Morales, the chief financial officer, presents you with the following information. Wonderful Wilderness raises funds to support its mission in a variety of ways, including contributions and membership fees. As part of this effort, Wonderful Wilderness develops and maintains mailing lists of its members, donors, catalog purchasers, and other supporters. Wonderful Wilderness holds exclusive ownership rights to its mailing lists. To acquire the names of additional prospective members and supporters, Wonderful Wilderness occasionally exchanges membership lists with other organizations. In addition, Wonderful Wilderness permits other tax-exempt organizations and commercial entities to pay a fee, identified in an annually updated schedule, to use its mailing lists on a one-time basis per transaction. Martín is aware that the Federal income tax law applies a UBIT. He is also aware of the § 512(b)(2) provision that excludes royalties from the UBIT. An IRS agent has raised the issue that the revenue from the use of the mailing lists by other entities may be taxable as unrelated business income. Martín wants you to research this issue. Write a letter to Martín that contains your findings, and prepare a memo for the tax research files. Wonderful Wilderness's address is 100 Wilderness Way, Pocatello, ID 83209.
Chapter23: Exempt Entities
Section: Chapter Questions
Problem 1RP
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Transcribed Image Text:Research Problem 1. Wonderful Wilderness, Inc., is a tax-exempt organization. Its mission is to "make the
world a greener place through education, research, exploration, and restoration."
Martín Morales, the chief financial officer, presents you with the following information. Wonderful
Wilderness raises funds to support its mission in a variety of ways, including contributions and
membership fees. As part of this effort, Wonderful Wilderness develops and maintains mailing lists of its
members, donors, catalog purchasers, and other supporters.
Wonderful Wilderness holds exclusive ownership rights to its mailing lists. To acquire the names of
additional prospective members and supporters, Wonderful Wilderness occasionally exchanges
membership lists with other organizations. In addition, Wonderful Wilderness permits other tax-exempt
organizations and commercial entities to pay a fee, identified in an annually updated schedule, to use its
mailing lists on a one-time basis per transaction.
Martín is aware that the Federal income tax law applies a UBIT. He is also aware of the § 512(b)(2) provision
that excludes royalties from the UBIT. An IRS agent has raised the issue that the revenue from the use of the
mailing lists by other entities may be taxable as unrelated business income. Martín wants you to research
this issue.
Write a letter to Martín that contains your findings, and prepare a memo for the tax research files.
Wonderful Wilderness's address is 100 Wilderness Way, Pocatello, ID 83209.
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