The Internal Revenue Service today issued proposed regulations for the new 1.4 percent excise tax on the net investment income of certain private colleges and universities.
The proposed regulations define several of the terms necessary for educational institutions to determine whether the section 4968 excise tax applies to them.
The tax applies to any private college or university that has at least 500 full-time tuition-paying students (more than half of whom are located in the U.S.) and that has assets other than those used in its charitable activities worth at least $500,000 per student. An estimated 40 or fewer institutions are affected.
For affected institutions, the guidance clarifies how to determine net investment income, including how to include the net investment income of related organizations and how to determine an institution’s basis in property.
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