Publication advertising: What is taxable?
Many tax-exempt organizations publish magazines or other periodicals that contain editorial material related to the organization's exempt purpose. Often, these periodicals also contain commercial advertising.
When the advertising activity constitutes a trade or business regularly carried on by the organization, the sale of advertising represents an unrelated business activity. The organization will
pay federal (and likely state) income tax on this income if there is a net profit from the activity.
To determine the amount of unrelated business taxable income (UBTI) attributable to the sale of advertising, it is necessary to determine the following...