On the Record: All that Glitters Isn't Tax Exempt

2. Unlike a C corporation where the corporation pays taxes on its income and shareholders pay taxes on dividends received from the C corporation, an S corporation does not pay income taxes on its income but instead the income is passed to and taxed in the hands of the shareholder.

3. Debt-financed property presents a whole other array of UBIT issues, again, beyond the scope of this article. If an exempt organization is the beneficiary of an asset on which there is a mortgage it should be aware of the interplay between the debt-financed characteristics and the rules governing UBIT.