On October 30, 2015, the IRS released Public Letter Ruling 201544025.
In the PLR, M was a non-for-profit alumni association relating to a two-year community college that runs a weekly public fair-type exhibition. M does not charge an admittance fee to the fair.
In order to raise money, any person wishing to sell at the weekly fair must submit an application for vendor space and pay an application fee along with a pace fee. There is also an ATM available at the fair, which M receives $1.50 for each transaction run through the ATM.
Section 513(a) provides that the term “unrelated trade or business” means any trade or business the conduct of which is not substantially related (aside from the need of such organization for income) to the exercise or performance by such organization of its charitable, educational, or other purpose constituting the basis for its exemption under § 501. In this case, the IRS believes M's income from the fair is not related to its exempt organization.