Unrelated business taxable income increased by amount of certain fringe benefit expenses for which deduction is disallowed

(a) In general Section 512(a) is amended by adding at the end the following new paragraph: (7) Increase in unrelated business taxable income by disallowed fringe (A) In general Unrelated business taxable income of an organization shall be increased by any amount— (i) which is paid or incurred by such organization for any qualified transportation fringe (as defined in section 132(f)) or any parking facility used in connection with qualified parking (as defined in section 132(f)(5)(C)), (ii) which is not directly connected with an unrelated trade or business which is regularly carried on by the organization, and (iii) for which a deduction is not allowable under this chapter by reason of section 274. (B) Exception for church organizations Subparagraph (A) shall not apply to— (i) any organization to which section 6033(a)(1) does not apply by reason of clause (i) or (iii) of section 6033(a)(3)(A), and (ii) any church-affiliated organization described in section 501(c) which is not required to file an annual return under section 6033(a)(1) by reason of section 6033(a)(3)(B). (C) Treatment as income from separate trade or business For purposes of paragraph (6), any increase under subparagraph (A) shall be treated as unrelated business taxable income with respect to an unrelated trade or business separate from any other unrelated trade or business of the organization. (D) Regulations The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this paragraph, including regulations or other guidance providing for the appropriate allocation of costs with respect to facilities used for parking.. (b) Effective date The amendment made by this section shall apply to amounts paid or incurred after December 31, 2025.

(a) In general Section 512(a) is amended by adding at the end the following new paragraph: (7) Increase in unrelated business taxable income by disallowed fringe (A) In general Unrelated business taxable income of an organization shall be increased by any amount— (i) which is paid or incurred by such organization for any qualified transportation fringe (as defined in section 132(f)) or any parking facility used in connection with qualified parking (as defined in section 132(f)(5)(C)), (ii) which is not directly connected with an unrelated trade or business which is regularly carried on by the organization, and (iii) for which a deduction is not allowable under this chapter by reason of section 274. (B) Exception for church organizations Subparagraph (A) shall not apply to— (i) any organization to which section 6033(a)(1) does not apply by reason of clause (i) or (iii) of section 6033(a)(3)(A), and (ii) any church-affiliated organization described in section 501(c) which is not required to file an annual return under section 6033(a)(1) by reason of section 6033(a)(3)(B). (C) Treatment as income from separate trade or business For purposes of paragraph (6), any increase under subparagraph (A) shall be treated as unrelated business taxable income with respect to an unrelated trade or business separate from any other unrelated trade or business of the organization. (D) Regulations The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this paragraph, including regulations or other guidance providing for the appropriate allocation of costs with respect to facilities used for parking.. (b) Effective date The amendment made by this section shall apply to amounts paid or incurred after December 31, 2025.