Which of the following is NOT true about UBTI?

The assertion that UBTI (Unrelated Business Taxable Income) only applies to tax-exempt organizations is not true. UBTI is a tax concept that is particularly relevant for tax-exempt organizations; however, it can also be applicable in contexts involving taxable entities. UBTI refers to income from a trade or business that is not substantially related to the charitable, educational, or other exempt purpose of the organization. Tax-exempt organizations, such as charities or pension funds, may generate UBTI when they engage in business activities unrelated to their exempt purpose. In such cases, they must pay taxes on that income. However, businesses that are not tax-exempt may also encounter UBTI should they be involved in activities that generate unrelated business income.

The other statements correctly describe aspects of UBTI. For example, UBTI indeed includes income from trade or business activities, is considered taxable for certain accounts like retirement accounts in specific situations, and requires filing Form 990-T if the UBTI exceeds a certain threshold. This context clarifies why the notion that UBTI only applies to tax-exempt organizations is misleading, as it overlooks broader scenarios where UBTI regulations can impact various income-generating entities.