Does a Church Bookstore create UBIT?

So what types of receipts affect UBIT???

The sale of religious publications or sermon tapes is generally related to the exempt purposes of a church. A bookstore is a little trickier.

We can eliminate any bookstore that is:

(1) Run by unpaid volunteers

(2) Provided only for the convenience of church members, or

(3) Selling only merchandise received as contributions.

We will assume the store is operating to make a profit and is open year-round. Therefore, if it does not meet one of the above exceptions, decide if the conduct of the store is related to the performance of an exempt purpose of the organization – such as education and training. The operation of the bookstore must contribute importantly to the accomplishment of that purpose.

Look at the location of the bookstore (is it inside the church?), sales of non-religious items (like pens or film), and hours the store is open.

Also, does the store conduct advertising and open its doors to the general public?

The tax may be imposed to eliminate the unfair competitive advantage the nonprofit organization would enjoy if they could sell products to the public in direct competition with taxable enterprises selling the same or similar merchandise.

Obviously, there is not one easy answer to this question, but hopefully this education will assist you in knowing what items to look for in evaluating your business activities.