Final Rules For Endowment Tax Exclude Some College Revenue (3)

The IRS is excluding some income streams from final rules aimed at endowment income of wealthy universities.

The 1.4% tax on net investment income—which applies to schools like Yale and Harvard—was part of the 2017 tax law, and falls under tax code Section 4968. The final rules, released Friday, could hit about 40 colleges, the agency has said previously. Stanford University, for example, has said it faces $43 million in taxes under the levy for fiscal year 2019.

“These regulations are significantly more generous than the proposed regulations,” said Elinor Ramey, a partner at ...