Section 512 B 13

Furthermore if the amount of rental income is dependent on a percentage of the lessee s sales or profits the rental income will not qualify for exclusion.

Section 512 b 13. The treasury regulations reason that such division of profits connects the exempt organization with the active conduct of a business. Code section 6033 h requires controlling organizations to report certain controlled entity transactions including loans fund transfers and receipt of interest annuities royalties or rents from the controlled entity on their forms 990. A controlled entity is one type of related organization whether tax exempt or taxable that is defined in code section 512 b 13 to include subsidiaries that are more than 50 percent controlled by the organization.

Irc 512 b 3. Notwithstanding subparagraph a amending this section income received in a taxable year beginning after december 31 1975 shall be excluded from gross income in determining unrelated business taxable income if such income would have been excluded by paragraph 13 or 14 of. E as f without specifying the act to be amended was executed by making the amendments to this section which is section 512 of the internal revenue code of 1986 to reflect the probable intent of congress.

According to the percentage of the income of the controlled organization that is unrelated business taxable income or would be unrelated business taxable income if the controlled organization were exempt. These rules pose a significant roadblock to contractual relationships among the group members. 109 280 which directed the amendment of section 512 b 13 by adding subpar.

Section 1951 b 8 b of pub.