The University may conduct basketball, tennis, or other sports camps in the summer. A summer sports camp will be treated as related if it is conducted as an educational or charitable activity. Income from these camps would not be subject to unrelated business income tax (UBIT).
For example:
- A summer camp operated for disadvantaged youths (Tech. Adv. Mem. 8020010).
- A camp that is part of University educational program (Tech. Adv. Mem.8151005).
- A camp that runs for high school students (Tech. Adv. Mem 7908009), or
- A camp that provides instruction in sports to the general public (Rev. Rul. 77-365)
If a camp is not related to University exempt purposes, it may still be possible to exclude the income under the rental exclusion, depending on the degree and extent of the services provided. If the camp is leased to a third party and the University only makes the facilities available to the third party for a fixed amount that was not dependent on the income or profit from the individual’s operation of the camp, then the income is excludable rental income. On the other hand, if the lease calls for the University to provide services such as meal and maid services, then the income from the camp will be subject to UBIT (Rev. Rul. 80-297, 1982-2 CB196).