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Message: [QUOTE="ClamOtto, post: 4687608, member: 368"] Yes, the tax exemption for nonprofits, including schools, goes back to the late 1800s, before the federal income tax even existed. The more interesting part, to me, is how nonprofits came to be taxed on "unrelated business income." In the 1950s, NYU owned Mueller's Macaroni. This made the other other macaroni companies very unhappy because of the unfair advantage from the tax exemption. A member of congress argued during the debate that if something wasn't done, all the macaroni companies in the US would come to be owned by universities. As you can imagine, that was a scary thought, so the unrelated business income tax was born. FWIW, income from athletics is generally exempt from unrelated business income tax because it furthers the schools' educational purposes... [/QUOTE]