A tax is imposed on the net investment income of these institutions
What the document says“There is hereby imposed on each applicable educational institution for the taxable year a tax equal to the applicable percentage of the net investment income of such institution for the taxable year.”
The section rewrites section 4968 of the Internal Revenue Code of 1986 to impose on each applicable educational institution a tax for the taxable year equal to the applicable percentage of its net investment income for that year.
What the document actually says“There is hereby imposed on each applicable educational institution for the taxable year a tax equal to the applicable percentage of the net investment income of such institution for the taxable year.”
A tax is laid on each school that qualifies. It is worked out on the school's investment income. A rate is applied to that income.
The rate is set by the next rule. Net investment income means gains and returns on the endowment. Only some schools are reached.
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