Exempt Organizations Technical Guide›TG 48: Unrelated Business Income Tax›Table of Contents
D.2. State and Municipal Colleges
Publication 5894 — Exempt Organizations Technical Guides TG 48: Unrelated Business Income Tax · 2026-10-03 edition · updated 2026-10-04 · United States
(1) The tax on unrelated business income didn’t apply to state and municipally
owned institutions of higher learning under the Revenue Act of 1950. The
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Revenue Act of 1951, however, remedied this omission by providing that state and municipal colleges and universities are subject to unrelated business income in the same manner as other colleges and universities which are taxexempt under Section 501(c)(3). See Section 511(a)(2)(B) and Treas. Reg. 1.511-2(a)(2).
(2) The UBIT is imposed not only on universities and colleges themselves, but also
on any wholly owned subsidiaries. See Section 511(a)(2)(B) and Treas. Reg. 1.511-2(a)(2).
(3) Section 7871(a)(5) provides that an Indian tribal government shall be treated as
a state for purposes of Section 511(a)(2)(B). Consequently, any college or university owned by an Indian tribal government is subject to the same treatment with respect to unrelated business income as state and municipally owned colleges and universities. Section 7871(a)(5) is effective for taxable years beginning after December 31, 1982. See also Treas. Reg. 305.78711(a)(3).
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