What Are “Dual Use” Expenses?

Question: What are “dual use” expenses?

Answer: If an expense is incurred both to carry on exempt functions of your nonprofit and to conduct an unrelated business, then you have what is known as a dual use expense. For example, let’s assume your nonprofit’s president is paid $80,000 per year. If he devotes 90% of his time to the exempt activities of your nonprofit, but 10% of his time to an unrelated business, the nonprofit can take a deduction of $8,000 (10% of $80,000) as a deductible expense associated with the unrelated activity on Form 990-T. 

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