Exempt Unincorporated Associations

The Massachusetts unrelated business income of an exempt unincorporated association is subject to tax under M.G.L. c. 62. An association’s Massachusetts unrelated business income is its federal gross income derived from its unrelated business activity, with the modifications set forth in M.G.L. c. 62, § 2. If the association is engaged in an unrelated trade or business, the association is generally entitled to the deductions allowed under M.G.L. c. 62, including the charitable contribution deduction under M.G.L. c. 62, § 3(B)(a)(13), that are directly connected with that trade or business. See 830 CMR 63.38T.1(5)(a) – (c). The charitable contribution deduction, however, is allowed to an exempt unincorporated association engaged in an unrelated trade or business even when the contribution is not directly connected with that trade or business. See Code § 512(b)(10).