Many not-for-profit organizations dread the unrelated business income tax (UBIT) because it can be a challenge to sort out when a not-for-profit's activities are subject to the tax and when they are not. However, it's important that organizations that qualify as tax-exempt get their arms around UBIT's uncertainties. More than 80,000 exempt organizations filed a 2017 Form 990-T, Exempt Organization Business Income Tax Return, reporting $15.4 billion in taxable income and $871.4 million in tax, according to the most recent IRS statistics. And while more than half of those organizations did not have unrelated business taxable income (UBTI) after subtracting deductions from gross unrelated business income (UBI) and thus did not have a UBIT liability, it is not unusual for Sec. 501 (c) tax-exempte organizations, especially charities, to have a UBIT liability, which can sometimes be an unexpected major expense.