Rev. Proc. 2011-52 provides exempt organizations with two inflation adjustments for 2012.
1. Dues Paid to Agricultural or Horticultural Organizations
Agricultural and horticultural organization described in §501(c)(5) are exempt organizations subject to the UBIT. Section 512(d) contains a special rule under which no portion of member dues paid to an agricultural or horticultural organization can be treated as UBTI by reason of benefits or privileges to which members are entitled. The exclusion applies for tax years beginning in 2012 so long as:
- Payment of dues is a condition of membership; and
- The required annual dues do not exceed $151.
When 512(d) was enacted in 1996, effective for tax years beginning after Dec. 31, 1986, the dollar limitation was $100. The limitation has been adjusted for inflation for taxable years beginning after 1995. Section 3.24 of Rev. Proc. 2011-52 provides that the inflation-adjusted amount for 2012 is $151. For tax years beginning in 2011, the §512(d)(1) limitation was $148.
2) Limitation for Contributions Solicited Using Low Cost Articles
Charitable organizations sometimes solicit contributions by mailing out low cost items to potential donors, hoping that receiving the items will spur the individual to make a contribution. Because the sale of goods constitutes a trade or business, contributions received in connection with mailings of low cost articles might be considered a taxable sale of the items by the organization to the extent of the value of the items. To prevent this result for inexpensive items, §513(h) provides that activities relating to the distribution of low cost articles are not an unrelated trade or business if the distribution is incidental to the solicitation of charitable contributions. For taxable years beginning in 2012, a low cost article is an item that cost the organization $9.90 or less.
When §513(h) was enacted in 1986, the exception applied to low cost articles of $5.00 or less. That number has been indexed for inflation since 1988. Section 3.25(1) of Rev. Proc. 2011-52 provides that the inflation-adjusted amount for 2012 is $9.90. For tax years beginning in 2011, the §513(h) limitation was $9.70 or less.