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IRS Replaces Long-Proposed Regs for Calculating UBTI of VEBAs and SUBs
McGuireWoods Link to more items from this source
[Guidance Overview]
Mar. 2, 2014

"[In] a 2003 decision, the U.S. Court of Appeals for the Sixth Circuit had concluded that the set-aside investment income taken into account should only include amounts accumulated and remaining in the set-aside fund at the end of the tax year. The New Regulations ... preclude the Sixth Circuit's interpretation going forward. The New Regulations also explicitly incorporate the statutory provisions that: [1] a Covered Entity's UBTI includes UBTI derived from any unrelated trade or business regularly conducted by the Covered Entity; [2] a Covered Entity is not subject to the 419A Limit for a tax year if substantially all the contributions to the Covered Entity during the tax year are made by employers who had been tax exempt for the preceding five-year period; and [3] a Covered Entity that is part of a 10- (or more) employer plan is subject to the 419A Limit."

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