Tax-exempt organizations, such as pension plans, individual retirement accounts, foundations, and endowments, are required to pay unrelated business income tax (UBIT) on any income generated from unrelated business activities. This UBIT is commonly referred to as UBTI. Many tax-exempt investors who invest in private investment funds aim to minimize or avoid the generation of UBTI. To achieve this, the fund must refrain from incurring debt and investing in flow-through operating entities unless it is done through blocker structures. Blocker structures involve setting up a corporation because any debt incurred by the corporation (or similar entity for federal income tax purposes) is not considered the shareholders’ responsibility. Additionally, dividends received from a corporation are exempt from UBTI, making investments made through a corporation generally not subject to generating UBTI (unless the shares themselves are financed through debt).