Form 1098-T – which is due to students by January 31 each year and due to the IRS by February 28 –
watch carefully for eFiling requirements – has seen a lot of “press” over the past few years. There have
been changes in the manner in which payments were applied, the “dissolution” of Box 2, and issues with
timely filing that required IRS intervention.

One question we often get concerns “who may file Form 1098-T and provide it to students?” The answer
– per the IRS – is: an “Eligible education institution.”
What’s that? Here goes…

An eligible educational institution is a college, university, vocational school, or other
postsecondary educational institution that is described in section 481 of the Higher Education
Act of 1965 as in effect on August 5, 1997, and that is eligible to participate in the Department of
Education’s student aid programs. This includes most accredited public, nonprofit, and private
postsecondary institutions.

Form 1098-T provides students with data that may allow them to offset the cost of higher education and
avoid potentially costly errors with the IRS with regard to education tax credits.
The American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC) can reduce
a taxpayer’s income tax liability dollar-for-dollar for qualified education expenses paid in the year. These
valuable credits can help offset the cost of higher education.

Okay, next question. What if our institution is not yet an “eligible education institution?”
In this situation, your institution would not be able to provide students with a Form 1098-T for a given
year. However, there is an Alternative: Form 886-H-AOC and the guidance therein. This is not a form
you would file but a “guidesheet” that is generally used by the IRS when “auditing” taxpayers who
claimed the American Opportunity Credit.

So, the student should be able to take advantage of educational credits – even without a Form 1098-T –
but they need to be diligent about DOCUMENTING enrollment and payment data. The students (or
parents) who want to claim the credit(s) but did not receive a Form 1098-T should be aware that they will
need to document:

Proof of enrollment

•  If any institution did not provide Form 1098-T, copies of other documents that verify enrollment, such as transcripts or other enrollment forms. The document(s) must include the institution’s name, federal identification number, dates of enrollment, and the student’s enrollment status (more than half time, not a graduate student).
•  Copies of proof of payment of tuition and fees such cancelled checks, bank statements, credit card statements or receipts. Form 1098-T may serve as proof of payment IF payments received are recorded in Box 1.

Proof of payment (of qualified expenses such as additional course related fees, books, and supplies)

• Copies of cancelled checks, bank statements, credit card statements or receipts.
•  Copies of documents that show the expenses were needed for a course of study, such as course
  guides, course syllabuses, or letters from the educational institution(s).
  

You should always remind your students that certain payment on behalf of the student will reduce the
amount of “qualified expenses.” Some of those “payments” include:

•  Employer provided educational assistance benefits
•  Withdrawals from any educational retirement arrangements
•  U.S. Savings bond interest that is nontaxable because you paid qualified higher education expenses
•  Veteran’s educational assistance benefits or
•  Any other nontaxable payment received for education expenses

Also, some expenses are often “confused” with qualified education expenses” although they are NOT.
These include:

• Insurance
•  Medical expenses (including student health fees)
•  Room and Board
•  Similar personal, living or family expenses. This is true even if the amount must be paid to the institution as a condition of enrollment or attendance

Finally, you should note that this discussion does not mean that an “eligible educational institution” can
simply forego providing/filing Form 1098-T and advise their students of the procedures mentioned above.
It you are an eligible educational institution you generally MUST complete/file Form 1098-T each year
for each student you enroll and for whom a reportable transaction is made (with stated exceptions in the
instructions).
TO REVIEW…

• Does your institution have policies/procedures with regard to Form 1098-T filing?
•  If you are not an “eligible educational institution” have you communicated with students/parents about how they might take advantage of educational tax credits without a Form 1098-T from your school?
•  For more, check out: https://www.eitc.irs.gov/other-refundable-credits-toolkit/what-you-need-to-know-about-aotc-and-llc/what-you-need-to-know
•  Remember, DOCUMENTATION, DOCUMENTATION, DOCUMENTATION!

Written by
David C. Moja, CPA www.mojacompany.com
The information provided herein presents general information and should not be relied on as accounting,
tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions
regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel
about the facts and laws that apply.

Digital assets continue to be an area of focus for higher education institutions.  From how to value those items to wild fluctuations in stated prices to how holding these assets might affect your financial position and financial responsibility scores.  Crypto currencies, Non-fungible tokens, and other items can be difficult to value and even more “funky” to understand.  An important concept in the digital asset valuation arena involves a qualified appraisal – needed or not?

Interestingly (or not), digital assets are defined in section 6045(g)(3)(D)as – “…the term ‘digital asset’ means any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.”

On January 13, 2023, the IRS issued Chief Council Memorandum CCA 202302012.  The subject of this “advisement” is:  “Qualified appraisal requirement for charitable contributions of cryptocurrency.”

This memo specifically disallows utilizing a valuation for donations of crypto currency greater than $5,000 based on a value listed at the cryptocurrency exchange.  The donor must obtain a qualified appraisal.  This differs from the treatment of contributions of publicly traded securities.

The memo contains a lot of technical data, but there is a section of facts that is followed by issues and conclusions.  Reviewing this information may be very helpful.

Facts

Taxpayer A is an individual who purchased units of Cryptocurrency B for personal investment purposes. Taxpayer A acquired units of Cryptocurrency B in a transaction on a cryptocurrency exchange. Taxpayer A later transferred all of her units of Cryptocurrency B to Charity, a charitable organization described in section 170(c). On her self-prepared Federal income tax return for the year of the donation, Taxpayer A completed Part I, Section B of Form 8283 and attached it to her return and claimed a charitable contribution deduction of $10,000. The claimed $10,000 deduction was based on a value listed at the cryptocurrency exchange on which Cryptocurrency B was traded at the date and time of the donation. Taxpayer A did not obtain, or attempt to obtain, a qualified appraisal for the donation, and Taxpayer A argues that no appraisal is required because Cryptocurrency B had a readily ascertainable value based on the value published by the cryptocurrency exchange.

Issues

1. Is Taxpayer A required to obtain a qualified appraisal under section 170(f)(11)(C) of the Code for contributions of cryptocurrency for which Taxpayer A claims a charitable contribution deduction of more than $5,000? 

2. If Taxpayer A is required to obtain a qualified appraisal under section 170(f)(11)(C) of the Code and fails to do so, does the reasonable cause exception provided in 170(f)(11)(A)(ii)(II) apply if Taxpayer A determines the value of the cryptocurrency based on the value reported by a cryptocurrency exchange on which the cryptocurrency is traded? 

Conclusions

1. Yes. If Taxpayer A donates cryptocurrency for which a charitable contribution deduction of more than $5,000 is claimed, a qualified appraisal is required under section 170(f)(11)(C) to qualify for a deduction under section 170(a). 

2. No. If Taxpayer A determines the value of the donated cryptocurrency based on the value reported by a cryptocurrency exchange on which the cryptocurrency is traded rather than by obtaining a qualified appraisal, the reasonable cause exception provided in 170(f)(11)(A)(ii)(II) will not excuse noncompliance with the qualified appraisal requirement, and Taxpayer A will not be allowed the charitable contribution deduction under section 170(a). 

TO REVIEW…

• Has your institution contemplated “digital assets” in relation to your Gift Acceptance policy?
• Are you currently holding “digital assets?”
• If so, have you valued crypto currency based upon historical exchange values?
• How do you need to update your policies/procedures based upon the IRS’ CCA 202302012?

Written by
David C. Moja, CPA www.mojacompany.com

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

The Isakson/Roe Act of 2020 made changes to the rules for institutions who provide Veterans
Administration benefits (i.e. the G.I. Bill) to their students. Here is a quick summary of the issue with
“our size” schools who do not “participate in” ED Title IV programs but have historically utilized V.A.
funds (i.e. G.I. Bill)…

The “Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of
2020” added several requirements, including Section 1015, that negatively affect those schools who
receive Veterans Administration (V.A.)/G.I. Bill funding that currently do not participate in Title IV.

Back in the Summer of 2021, the clarion call went out to schools in this situation to “apply for a waiver”
– as prescribed in the verbiage of this act.

Section 1015 of the new law requires an institution receiving V.A. funding to either:

1. Be approved for and participate in at least one program under Title IV, or
2. Receive a waiver from this requirement

Here is the specific verbiage as updated from the Isakson/Roe Act of 2020:
Section 3675(b)(4) [NEWLY ADDED WORDING EFFECTIVE 8/1/21]
The educational institution is approved and participates in a program under title IV of the Higher
Education Act of 1965 (20 U.S.C. 1070 et seq.) or the Secretary has waived the requirement under this
paragraph with respect to an educational institution and submits to the Committee on Veterans’ Affairs of
the Senate and the Committee on Veterans’ Affairs of the House of Representatives notice of such
waiver.”.
It was our hope – in alignment with the wording of the Act – that the Secretary would approve waivers
from institutions who (for various reasons) choose not to “participate” in Title IV which would continue
to allow those institutions to receive V.A. funds for their students who are veterans.  However, we were
disappointed.

Many affected institutions filed waiver requests by the August 1, 2021 deadline.  Below is a
model/sample that most schools utilized:

July 28, 2021
 
TO: VBACOSECTION1015WAVR@va.gov
 
To Whom It May Concern:

 
This letter is to officially request approval for an Education Service Waiver under 38 U.S.C. §§
3675(b)(4) and 3672(b)(2)(A)(i)(II) for INSTITUTION of CITY, ST.
Attached is the waiver request information as per the email from the U.S. Department of Veterans
Affairs as of July 19, 2021.
Please feel free to direct any questions you may have to me concerning this waiver request.
 
NAME OF INSTITUTION CONTACT
School Certifying Official
INSTITUTION

The response from the Veterans Administration (to all institutions we know of) was standardized and read
as follows:

VA has granted CDE Bible College…a waiver for requirements of section 1015 of the Isakson
and Roe Veterans Health Care and Benefits Improvement Act of 2020 (Public Law 116-315) until
December 31, 2022.  The purpose of this waiver is to allow your institution sufficient time to
come into compliance with these requirements.
Specifically, section 1015 amended chapter 36 of title 38 USC §3675 and 38 USC 3672(b)(2)(A)
to require accredited institutions to be eligible for participation in the Federal Student Aid
program under title IV of the Higher Education Act (HEA) of 1965 in order to be eligible to
receive GI Bill® funds.  Department of Education regulations state, an institution may
participate in any title IV, HEA program, other than the Leveraging Educational Assistance
Partnership (LEAP) and National Early Intervention Scholarship and Partnership (NEISP)
programs, only if the institution enters into a written program participation agreement with the
Secretary of Education.
At the conclusion of this waiver period, it is expected that your institution will be in compliance
with the provisions of section 1015 by entering into a program participation agreement with the
Department of Education.

This left most schools with a decision:  1) enter into an agreement to participate in Title IV or, 2) no
longer receive G.I. Bill funding for their students who are veterans.  Sadly, many schools have had to
make the difficult choice to not have this great benefit available for their veteran students.  It does not
appear to be fair nor equitable treatment.
Practically, it should not be difficult to provide a waiver process (as appears to be mandated in the Act)
for schools who want to provide educational benefits to veterans, but feel compelled – for various reasons
– not to participate in Title IV. The V.A. could simply provide:

1. A standard waiver form/template (might be completed on-line)
2. Require documentation of “eligibility” for the statutory waiver (accreditation, compliance
   with Isakson/Roe Section 1018, etc.)
3. Define a streamlined review process for waiver “approval”
4. Provide the institution who has “applied” for the waiver with a letter of approval

What could be more simple than that?
We still hold out hope that the V.A. will reconsider their position and provide a waiver (as appears to be
contemplated in the Isakson/Roe Act, Section 3675(b)(4)) from the requirement to participate in Title IV
programs in order to receive V.A. funds to aid in veteran students’ educations.

TO REVIEW…

• Has your institution historically stayed “out of” Title IV funding?
•  If so, have you participated in V.A. Funding (the G.I. Bill)?
•  In those cases, did you know that you would be ineligible for V.A. Funding as of 1/1/2023?
•  If your school participates in Title IV, you are generally not affected by this issue.

Written by
David C. Moja, CPA www.mojacompany.com
The information provided herein presents general information and should not be relied on as accounting,
tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions
regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel
about the facts and laws that apply.

As we move past Thanksgiving and “Giving Tuesday” and move into the Christmas and year-end giving
season, it might be an interesting time to consider your institution’s Gift Acceptance Policy and the
procedures surrounding the acceptance of donor gifts.
Many of you have been hearing about the sudden collapse and bankruptcy proceedings of FTX. This
seemingly robust cryptocurrency exchange sought to be very philanthropic – in their terms “altruistic.”
FTX gave heavily to many future-looking projects and to political parties – to the tune of billions of
dollars.

One question that arises with regard to the FTX collapse is whether the bankruptcy court might seek to
have some or all of the FTX contributions to charities and/or political parties returned. This process –
sometimes referred to as “clawbacks” – could be devastating to recipients. This would be especially
difficult for those who have spent the funds.
So, first question: Does your institution have a “Gift Acceptance Policy” in place? And, right behind that
question: If so, do you follow it?

If your institution does not have a policy of this nature, you should. Please contact us about more
information and policy templates that may assist you and your Team in the process.
Back to FTX and possible “clawbacks.” This post is for information purposes. We are not attorneys and
are not offering legal advice.

Clawbacks generally happen when debtors file claims/complaints with the bankruptcy court. These
complaints most often take the form of 1) preference demands or, 2) fraudulent conveyance claims.
With a preference demand, there would be a request for the return of payments made within 90 days
before the bankruptcy. If actual fraud is involved, there is the potential for a 2-year clawback period.
Back in 1998, Congress enacted the Religious Freedom and Charitable Donation Protection Act that is
designed to protect churches and other charities from having to turn over charitable contributions to a
bankruptcy trustee. A key to this legislation is the following provision, which is an amendment to section
548(a)(2) of the bankruptcy code:

A transfer of a charitable contribution to a qualified religious or charitable entity or organization
shall not be considered to be a transfer [subject to recovery by a bankruptcy trustee] in any case
in which—(A) the amount of that contribution does not exceed 15 percent of the gross annual
income of the debtor for the year in which the transfer of the contribution is made; or (B) the
contribution made by a debtor exceeded the percentage amount of gross annual income specified
in subparagraph (A), if the transfer was consistent with the practices of the debtor in making
charitable contributions.

Historically, clawbacks of donations to charities are pretty rare. However, in a 2014 church case
(McGough, 737 F.3d 1268 (10th Cir. 2014)), required a church to return donations from a bankrupt
couple that gave over 15% of their annual income to the church. The question arose with respect to the
amount of the contributions that the church was required to return to the bankruptcy court. On appeal, the

question arose as to whether the church would be required to return all of the “over 15%” contributions or
only the amount that exceeded 15% in a given year.

In McGough, a federal appeals court concluded that contributions in excess of 15 percent of annual
income are entirely recoverable by the bankruptcy trustee. This includes the first 15% of the
contributions made by the bankrupt donor.

TO REVIEW…

• Does your school have a “Gift Acceptance Policy” in place that is followed by Management and the Board?
•  Have you considered the potential ramifications of accepting “digital assets” – including cryptocurrency donations?
•  Please consider the potential issues that may arise from accepting donations of “unstable” assets or from struggling donors/entities.
•  Be sure you and your Team are knowledgeable about the “ins-and-outs” of non-cash or “alternative” asset donations.

Written by
David C. Moja, CPA www.mojacompany.com
The information provided herein presents general information and should not be relied on as accounting,
tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions
regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel
about the facts and laws that apply.

November 15, 2022
At this wonderful time of year, we are often asked about whether the value of a turkey, ham, or other item
of merchandise purchased by an employer and distributed generally to each of an institution’s employees
at Thanksgiving – or Christmas – might constitute wages subject to income tax withholding or income
subject to tax for income tax purposes. In most cases the answer is, No. But what about coupons,
vouchers, or gift certificates?

For example, at a College’s annual campus-wide “Thanksgiving Feast,” the President and Academic
Dean of the college go around and give each staff/faculty member a card containing a
certificate/coupon/voucher for a 16-18 pound turkey at a local grocery store. Everyone also gets a
personal “Happy Thanksgiving – we are very thankful for you!” handshake – or hug.

First, it would generally be okay to hand out turkeys or hams. Also, we know that the IRS considers gift
certificates that are redeemable for any merchandise to be taxable income to the employee (and includable
in Form W-2). But what about these “certificates” that can ONLY be exchanged for a turkey?

It is our thought that these certificates/coupons/vouchers would generally not be considered gift cards.
The IRS has stated that whether a “gift coupon” (now more commonly referred to as a gift card) is
redeemable in cash is not the determining factor here.

We would make the case that it would be administratively impractical to try and accumulate each and
every “redeemed value” for every turkey redeemed. Also, given the language used by the IRS in a 2004
Tax Advice Memorandum (TAM), it may be prudent to call these items “certificates” rather than
“coupons.”

Please note that a gift card of a stated amount would clearly be taxable to the employee based upon the
2004 TAM – which ultimately employs the “same as cash” reasoning. Also, as stated by the IRS in
Notice 2017-9, taxable gift cards would not be covered by the Form W-2 “de minimis error safe harbor.”

From Revenue Ruling 59-58:
“It is accordingly held that the value of a turkey, ham, or other item of merchandise of similar nominal
value, distributed by an employer to an employee at Christmas, or a comparable holiday, as part of a
general distribution to employees engaged in the business of the employer as a means of promoting their
good will, does not constitute wages subject to income tax withholding or wages for Federal Insurance
Contributions Act or Federal Unemployment Tax Act purposes.”

“…The foregoing rules will not apply to distributions of cash, gift certificates, and similar items of readily
convertible cash value, regardless of the amount involved.”

From Technical Advice Memorandum 200437030:
Whether a gift coupon is “redeemable in cash” is not determinative of whether a gift coupon is a “cash
equivalent fringe benefit” for Income Tax Regulation § 1.132-6(c) purposes. Neither the statute nor the
regulations pertaining to de minimis fringe benefits define a cash equivalent fringe benefit as one that can
be readily converted to cash. Instead, we look to the language of Code § 132(e) which requires a
determination of whether it is administratively impracticable to account for the gift coupons provided in
this case.

TO REVIEW…

•  Happy Thanksgiving to everyone and please know that we are very grateful for you and your institutions!

•  Certificates/coupons/vouchers redeemable only for a turkey equate to distributing turkeys (or Christmas hams) by your organization and should not be taxable to the employee.

•  Remember that gift cards – which are so prevalent these days – are generally going to be taxable and includable in employees’ compensation.

•  Be sure you are knowledgeable about the “ins-and-outs” of holiday employee gift giving – in order to keep things “non-taxable.”

Written by
David C. Moja, CPA www.mojacompany.com
The information provided herein presents general information and should not be relied on as accounting,
tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions
regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel
about the facts and laws that apply.

The Coronavirus “Era” (that we are still not through) has hit many of us in different ways.
Through the negatives, we have learned much and – in some cases – become better at what we
do. But it has been a struggle.

Even though the IRS has recently been super-funded by Congress, they, more than many, found
the COVID days to be a steep uphill battle. Coronavirus relief provisions, new tax rules, work-
from-home dynamics, beaucoup retirements provided many challenges for the Service.
Now, as unlikely as it might seem, the IRS has provided another measure of COVID relief. Just
announced with IRS Notice 2022-36, they are “forgiving” some late-filing penalties on some
returns. Included in the list of returns is Form 990-T that some higher education institutions are
required to file annually.

If your institution received penalty notices for late filing Form 990-T, relief is given under
Notice 2022-36. This does not cover late payment/failure to pay penalties.
In another scenario, if an institution has not yet filed their 990-T returns for the 2019 and/or 2020
taxable year(s), they may file prior to September 30, 2022 with no penalties!
In short, the Notice “… provides relief for certain taxpayers from certain failure to file penalties
and certain international information return (IIR) penalties with respect to tax returns for taxable
years 2019 and 2020 that are filed on or before September 30, 2022. This notice also provides
relief from certain information return penalties with respect to taxable year 2019 returns that
were filed on or before August 1, 2020, and with respect to taxable year 2020 returns that were
filed on or before August 1, 2021. The relevant penalties will be waived or, to the extent
previously assessed, abated, refunded, or credited. [Emphasize added.]

From Notice 2022-36:
Waiver and Abatement of Certain Penalties for Taxpayers

The IRS will not impose the penalties listed in section 3.A.(1) through (4) of this notice with
respect to the specified tax returns for taxable years 2019 and 2020 that are filed on or before
September 30, 2022. The penalties listed in this section 3.A of this notice will be automatically
abated, refunded, or credited, as appropriate without any need for taxpayers to request this relief.

• Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation; and Form 990-T, Exempt Organization Business Income Tax Return (and Proxy Tax Under Section 6033(e)) [one item on the listing]

At the end of the day, you should converse amongst your management team and tax advisors and
discern whether this new “2022-36 relief” may be something your institution might be able to
take advantage of.

Written by
David C. Moja, CPA www.mojacompany.com
The information provided herein presents general information and should not be relied on as accounting,
tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions
regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel
about the facts and laws that apply.

Let’s face it. It can be a challenge for many institutions to ensure that the Finance Team is
notified regarding every single in-kind or non-cash donation. At your school, is there a chance
that someone might donate some type of “know how” and that it would not be communicated
fully nor recorded at fair market value?

Form 990, Part V, Line 7g, asks, “If the organization received a contribution of qualified
intellectual property, did the organization file Form 8899 as required?”
Many folks in the Finance Departments of Bible Colleges and Seminaries aren’t quite sure what
intellectual property is much less anything about Form 8899. Note that failure to file Form 8899
in a complete, accurate, and timely manner could result in penalties. To compound matters,
there is not an entry in the Form 990 Glossary (which can be a great resource) regarding
“intellectual property.”

Even though the Form 990 Glossary does not contain a definition of “intellectual property,” the
Form 990 instructions do provide some guidance (see page 16 of the 2021 990 instructions).
There, we see a listing of intellectual property that includes any of the following:

• Patent
• Copyright (other than certain self-created copyrights)
• Trademark
• Trade name
• Trade secret
• Know-how
• Software (other than certain “canned” or “off-the-shelf” software or self-created software)
• Similar property
• Applications or registrations of such property

Now, that is a pretty broad – and not necessarily crystal clear – listing.  I’d especially like to
know more about “similar property.” The instructions for Form 8899 clarify that the following
items are NOT considered ‘intellectual property’:

1. Computer software that is readily available for purchase by the general public, is subject
   to a nonexclusive license, and has not been substantially modified.
2. A copyright held by a taxpayer:

• Whose personal efforts created the property, or
• In whose hands the basis of the property is determined, for purposes of determining gain from a sale or exchange, in whole or in part by reference to the basis of the property in the hands of a taxpayer whose personal efforts created the property.

When we dig a little deeper into the 990 instructions for Part V, we get a little bit clearer picture…

Form 990 Instructions – Part V, Line 7g:

Line 7g. Form 8899, Notice of Income From Donated Intellectual Property, must be filed by certain organizations that received a charitable gift of qualified intellectual property that produces net income. The organization should check “Yes,” if it provided all required Forms 8899 for the year for net income produced by donated qualified intellectual property. Qualified intellectual property is any patent, copyright (other than certain self-created copyrights), trademark, trade name, trade secret, know-how, software (other than certain “canned” or “off-the-shelf” software or self-created software), or similar property, or applications or registrations of such property. If the organization didn’t receive a contribution of qualified intellectual property, leave line 7g blank.

 So, consider having a conversation with your management team – especially the development crowd – about making sure the Finance/Accounting Team is aware if/when a contribution of “intellectual property” comes to your institution.

Written by
David C. Moja, CPA www.mojacompany.com
The information provided herein presents general information and should not be relied on as accounting,
tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions
regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel
about the facts and laws that apply.

As they do annually, in late 2021, the IRS released the standard mileage rates for 2022. Prior to the
beginning of any given calendar year, it is a good idea to update your various polices, guidelines,
worksheets, and templates to reflect the new rates.

The original 2022 rates were as follows:
* 58.5 cents per mile for business purposes
* 18 cents per mile for medical purposes (the moving deduction is not available for 2022)
* 14 cents per mile for charitable purposes (set by statute, thus does not change annually)

However, in a rare – but not unprecedented – move, the IRS has increased the standard mileage rates for
the second half of 2022. These new rates “kicked in” as of July 1, 2022. Both the business mileage rate
and medical mileage rate increase by 4 cents per mile greater than the original 2022 posted amounts. The
details may be found in IRS Announcement 2022-13, issued June 9, 2022.

Beginning July 1, 2022, the standard mileage rates for cars, vans, pickups, and panel trucks increases to
62.5 cents per mile for business purposes, 22 cents per mile for medical or moving purposes, and 14 cents
per mile for charitable purposes.

The updated 2022 rates were as follows:
* 62.5 cents per mile for business purposes
* 22 cents per mile for medical purposes (the moving deduction is not available for 2022)
* 14 cents per mile for charitable purposes (set by statute, thus does not change annually)

Consistent with the past few years (following the 2017 TCJA), the rates cannot be used to claim an
itemized deduction for unreimbursed employee travel expenses or for moving expenses (except for
certain members of the U.S. Armed Forces).

Written by
David C. Moja, CPA www.mojacompany.com
The information provided herein presents general information and should not be relied on as accounting,
tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions
regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel
about the facts and laws that apply.

Here’s a question we get occasionally: Our school has coin-operated washing machines and
dryers are used by resident students to wash linens, clothing, etc.  Do the revenues from the
Laundromat constitute unrelated business income? What if the Laundromat is open to the general
public for their use as well as use by students?

Let’s start with the student use and answer “No” – generally due to the “convenience exception”
(see below).

If, however, there is use by the general public – beyond the obvious security risks (and that’s an
“Enterprise Risk Management” (ERM) discussion) – potential unrelated business income issues
would generally depend upon the percentage of public use. For the fun of it, let’s say that the
Finance Team at this college has done some analysis and 27% of their laundry revenues come
from the general public (not students nor staff).

From IRS Publication 598:

Convenience of members.  A trade or business conducted by a 501(c)(3) organization or by a
governmental college or university primarily for the convenience of its members, students,
patients, officers, or employees is not an unrelated trade or business. For example, a laundry
operated by a college for the purpose of laundering dormitory linens and students’ clothing isn’t
an unrelated trade or business. (Color added for emphasis.)

The laundry is clearly for the convenience of the college’s students.

So, would this college be safe (in the UBIT sense) in operating a laundry facility where 27% of
revenues came from the non-student public?  Hmmm. I would suggest that the “public” limit
would be closer to 15%, based upon other UBIT provisions in the Code. And, if the college
actively advertised the laundry to the public and/or competed with for-profit, local laundries in
other ways, the IRS might deem the income from the general public to be unrelated business
income and subject to tax. Note that the college could deduct direct and allocable expenses
against this income when the filed Form 990-T each year. Also, the college would need to
ascertain which “silo” (from NAICS two-digit codes) their “laundry operations” fit into for
completing Form 990-T, Schedule A – but that is another topic…

Written by: David C. Moja, CPA www.mojacompany.com

The information provided herein presents general information and should not be relied on as accounting,
tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions
regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel
about the facts and laws that apply.

These days, post-COVID, many colleges are looking toward new fundraising ventures in order to raise
much-needed dollars. One opportunity may be in the form of “raffles.” Institutions should diligently
research and ensure that they are staying within the law when it comes to “gaming” activities.
The glossary of the Form 990 instructions (2021) defines gaming as:

Includes (but isn’t limited to): bingo, pull tabs/instant bingo (including satellite and progressive or
event bingo), Texas Hold-Em Poker, 21, and other card games involving betting, raffles, scratch-
offs, charitable gaming tickets, break-opens, hard cards, banded tickets, jar tickets, pickle cards,
Lucky Seven cards, Nevada Club tickets, casino nights/Las Vegas nights (other than events not
regularly carried on in which participants can play casino-style games but the only prizes or
auction items provided to participants are noncash items that were donated to the organization,
which events are fundraising events), and coin-operated gambling devices. Coin-operated
gambling devices include slot machines, electronic video slot or line games, video poker, video
blackjack, video keno, video bingo, video pull tab games, etc. See Pub. 3079, Tax-Exempt
Organizations and Gaming.

Recently, the IRS published a new “Issue Snapshot” entitled, “Gaming and Unrelated Business Taxable
Income.”
“Issue Snapshots” – according to the IRS – “provide an overview of an issue and are a means for
collaborating and sharing knowledge among IRS employees. Issue Snapshots may not contain a
comprehensive discussion of all pertinent issues, law or the IRS’s interpretation of current law.”

Here are some other gaming resources:
– IRS Publication 3079, “Tax-Exempt Organizations and Gaming” at:
https://www.irs.gov/pub/irs-pdf/p3079.pdf
- Schedule G (Form 990) – Instructions, at:
 https://www.irs.gov/pub/irs-pdf/i990sg.pdf
- The IRS webpage – “Exempt Organization Gaming and Unrelated Business Taxable Income”
may be found at:
Exempt Organization Gaming and Unrelated Business Taxable Income | Internal Revenue Service
(irs.gov)

Excerpt from IRS Exempt Organization Issue Snapshot, “Gaming and Unrelated Business Taxable
Income”:
Gaming is a recreational activity and, if conducted for a profit, a trade or business. Gaming includes
bingo, beano, raffles, lotteries, pull-tabs, scratch-offs, pari-mutuel betting, Calcutta wagering, pickle jars,
punchboards, tip boards, tip jars, certain video games, and other games of chance.

Gaming is also a common type of fundraising engaged in by tax-exempt organizations. In addition, many
types of organizations conduct gaming in furtherance of social or recreational purposes. Gaming is
normally regulated by state and local law in the jurisdiction in which the activity occurs.
Most gaming, if regularly carried on for profit, is an unrelated trade or business activity, which may
produce unrelated business taxable income (UBTI).  As with other unrelated trade or business activities,
the fact that an organization uses the proceeds from its gaming to pay for its exempt purpose programs
does not make the gaming activity related to its exempt purposes.  Therefore, gaming income received by
exempt organizations is treated as UBTI, unless a specific exception applies.

Audit Tips:

•  Determine whether gaming is an unrelated trade or business. Factors to consider:
•  The frequency of the activity,
•  The length of time it has continually been conducted,
•  How the organization promotes the activity, and
•  How nonexempt businesses conduct similar activities. 
•  Determine the organization’s meaning of “membership.”
•  Distinguish guest income from income from members of the general public
•  Determine whether the organization’s gaming activities are regulated by state or local law.
•  All workers involved in the operation of the gaming activities must be taken into account in determining if substantially all of the work is performed without compensation.
•  Bingo dauber sales and food/beverage sales don’t meet the bingo exclusion and are unrelated business income unless one of the IRC Section513(a) exceptions applies or bingo is conducted with members only (as applicable).
•  Determine if gaming activity is primary activity and/or if receipts are substantial which may affect foundation classification (for IRC Section 501(c)(3) organizations) and/or exemption status. 

There are really two issues with gaming activities. First, is it gaming for Form 990 purposes. Second,
might the activity be considered an unrelated business activity. As to gaming, we should look at the
definition in the glossary of the Form 990 instructions. With the UBIT issue, the IRS actually released an
‘Issue Snapshot’ on gaming a few years ago. Also, remember that ‘gaming’ activities will generally need
to be reported at Form 990, Part VIII, Line 9 and on Schedule G (Form 990), Part III.
Take care to gather data and obtain great counsel when it comes to gaming activities.

Written by
David C. Moja, CPA www.mojacompany.com
The information provided herein presents general information and should not be relied on as accounting,
tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions
regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel
about the facts and laws that apply.