Defining Unrelated Business Activities

Unrelated business activities generally involve providing services or products to individuals or entities who are not affiliated with the University (i.e., non-UC groups and corporations, and those who are not University students, faculty and administrative personnel).

Unrelated business activities are revenue-producing activities that are:

  • Not directly related to achieving the University's educational and research missions.
  • Conducted for the primary purpose of earning a profit.

These activities may be subject to unrelated business income tax (UBIT), which is imposed at the same tax rates applicable to for-profit corporations. For a complete explanation of unrelated business activities see BUS A-61.

Tax Treatment

Departments engaged in unrelated sales and service business activities are required to contact Tax Services.
Some common examples of unrelated business activities include, but are not limited to, activities that generate revenue from:

  • Advertising in University publications for a non-educational purpose.
  • Rental of facilities to non-University groups for events that are not considered educational.
  • The sale of memberships for the use of our recreational activities by alumni and other members of the public.
  • Routine laboratory services provided to non-University persons such as physicians' private practices.

Passive income items such as rents, royalties, interest and dividends are generally exempt from UBIT.

To help determine if an income producing activity is an unrelated business activity, please see the Unrelated Business Income Review Guidelines and complete a UC Nonfinancial Questionnaire for review by Tax Services.