[Code of Federal Regulations]
[Title 26, Volume 7]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.512(c)-1]

[Page 164-165]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.512(c)-1  Special rules applicable to partnerships; in general.

    In the event an organization to which section 511 applies is a 
member of a partnership regularly engaged in a trade or business which 
is an unrelated trade or business with respect to such organization, the 
organization shall include in computing its unrelated business taxable 
income so much of its share (whether or not distributed) of the 
partnership gross income as is derived from that unrelated business and 
its share of the deductions attributable thereto. For this purpose, both 
the gross income and the deductions shall be computed with the necessary 
adjustments for the exceptions, additions, and limitations referred to 
in section 512(b) and in Sec. 1.512(b)-1. For example, if an exempt 
educational institution is a

[[Page 165]]

partner in a partnership which operates a factory and if such 
partnership also holds stock in a corporation, the exempt organization 
shall include in computing its unrelated business taxable income its 
share of the gross income from the operation of the factory, but not its 
share of any dividends received by the partnership from the corporation. 
If the taxable year of the organization differs from that of the 
partnership, the amounts included or deducted in computing unrelated 
business taxable income shall be based upon the income and deductions of 
the partnership for each taxable year of the partnership ending within 
or with the taxable year of the organization.