Question 1

If the unrelated business income of an exempt organization is $25,000 or less, the unrelated business income tax (UBIT) will be $0.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following statements regarding intermediate sanctions is correct?

Accepted Answer

A)  Intermediate sanctions are self-assessing (i.e., calculated and paid by the taxpayer rather than being imposed by the IRS). 
B)  The excise tax is imposed on the exempt organization and on disqualified persons. 
C)  Both a first-level tax and a second-level tax may apply. 
D)  The corporate tax rates apply in calculating the amount of the tax liability. 
E)  None of the above is correct. 
A)  Intermediate sanctions are self-assessing (i.e., calculated and paid by the taxpayer rather than being imposed by the IRS). 
B)  The excise tax is imposed on the exempt organization and on disqualified persons. 
C)  Both a first-level tax and a second-level tax may apply. 
D)  The corporate tax rates apply in calculating the amount of the tax liability. 
E)  None of the above is correct. C

Question 3

Match the following tax forms
-Form 4720

Accepted Answer

A) Return of Private Foundation. 
B) Application for Recognition of Exemption under § 501(c)(3). 
C) Return of Organization Exempt from Income Tax. 
D) Return of Certain Excise Taxes on Charities and Other Persons under Chapters 41 and 42 of the Internal Revenue Code. 
E) Application for Recognition of Exemption under § 501(a).
F)Application for Extension of Time. 
A) Return of Private Foundation. 
B) Application for Recognition of Exemption under § 501(c)(3). 
C) Return of Organization Exempt from Income Tax. 
D) Return of Certain Excise Taxes on Charities and Other Persons under Chapters 41 and 42 of the Internal Revenue Code. 
E) Application for Recognition of Exemption under § 501(a).
F)Application for Extension of Time. D

Question 4

Match the following statements
-Tax on self-dealing

Accepted Answer

A) ​May be subject to some Federal income taxation and classification may adversely affect amount of charitable contributions received. 
B) Tax imposed for engaging in transactions with disqualified persons. 
C) Tax imposed on investments that enable a private foundation to control unrelated for-profit businesses.​
​ 
A) ​May be subject to some Federal income taxation and classification may adversely affect amount of charitable contributions received. 
B) Tax imposed for engaging in transactions with disqualified persons. 
C) Tax imposed on investments that enable a private foundation to control unrelated for-profit businesses.​
​

Question 5

George is running for mayor of Culpepper. The members of Third Church adamantly oppose his candidacy. They would like to run a political advertisement in the local newspaper opposing his candidacy. The newspaper ad would have no effect on Third Church's exempt status because the ad opposes George; it does not support his opponent.

Accepted Answer

A) True 
 B)False

Question 6

Certain § 501(c)(3) exempt organizations are permitted to engage in lobbying activities in the same manner as taxable organizations.

Accepted Answer

A) True 
 B)False

Question 7

A § 501(c)(3) organization that otherwise would be classified as a private foundation can avoid such classification if it satisfies:

Accepted Answer

A)  Only an external support test. 
B)  Only an internal support test. 
C)  Both an external support test and an internal support test. 
D)  An external support test, an internal support test, and a good faith test. 
E)  None of the above. 
A)  Only an external support test. 
B)  Only an internal support test. 
C)  Both an external support test and an internal support test. 
D)  An external support test, an internal support test, and a good faith test. 
E)  None of the above.

Question 8

Match the following tax forms
-Form 1023

Accepted Answer

A) Return of Private Foundation. 
B) Application for Recognition of Exemption under § 501(c)(3). 
C) Return of Organization Exempt from Income Tax. 
D) Return of Certain Excise Taxes on Charities and Other Persons under Chapters 41 and 42 of the Internal Revenue Code. 
E) Application for Recognition of Exemption under § 501(a).
F)Application for Extension of Time. 
A) Return of Private Foundation. 
B) Application for Recognition of Exemption under § 501(c)(3). 
C) Return of Organization Exempt from Income Tax. 
D) Return of Certain Excise Taxes on Charities and Other Persons under Chapters 41 and 42 of the Internal Revenue Code. 
E) Application for Recognition of Exemption under § 501(a).
F)Application for Extension of Time.

Question 9

Engaging in a prohibited transaction can result in an exempt organization being subject to Federal income tax, but cannot cause it to lose its exempt status unless the exempt organization repeats the prohibited transaction.

Accepted Answer

A) True 
 B)False

Question 10

If an exempt organization conducts a trade or business that consists of either exchanging or renting to other exempt organizations the organization's donor or membership list, such trade or business is an unrelated trade or business.

Accepted Answer

A) True 
 B)False

Question 11

Discuss benefits for which an exempt organization may be eligible, other than exemption from Federal income tax.

Accepted Answer

In addition to being exempt from Federal

Question 12

Revenue generated by an exempt organization from the distribution of low-cost items is not income from an unrelated trade or business.

Accepted Answer

A) True 
 B)False

Question 13

Give an example of the indicated types of exempt organizations
-Not an exempt organization

Accepted Answer

A) League of Women Voters. 
B) Teachers' association. 
C) American Plywood Association. 
D) Six Flags over Texas theme park. 
E) Salvation Army. 
A) League of Women Voters. 
B) Teachers' association. 
C) American Plywood Association. 
D) Six Flags over Texas theme park. 
E) Salvation Army.

Question 14

Ice, Inc., a § 501(c)(3) organization, has been leasing a building to Soft, Inc., a taxable entity, for 15 years. The lease terminates in the current tax year. Ice's adjusted basis for the building is $225,000. It sells the building to the Development Partnership, a taxable entity, for $440,000. Selling expenses are $26,400. Calculate the effect of the sale on Ice's UBTI.

Accepted Answer

The answer of Ice, Inc., a § 501(c)(3) organization, has...

Question 15

Teal, Inc., is a private foundation which failed to distribute an adequate amount of income for the exempt purpose of Teal. Which of the following statements is correct?

Accepted Answer

A)  An excise tax in the form of an initial tax at the rate of 5% may be imposed on Teal. 
B)  An excise tax in the form of an initial tax at the rate of 2.5% may be imposed on the foundation manager. 
C)  An excise tax in the form of an additional tax at the rate of 100% may be imposed on Teal. 
D)  An excise tax in the form of an additional tax at the rate of 50% may be imposed on the foundation manager. 
E)  None of the statements is correct. 
A)  An excise tax in the form of an initial tax at the rate of 5% may be imposed on Teal. 
B)  An excise tax in the form of an initial tax at the rate of 2.5% may be imposed on the foundation manager. 
C)  An excise tax in the form of an additional tax at the rate of 100% may be imposed on Teal. 
D)  An excise tax in the form of an additional tax at the rate of 50% may be imposed on the foundation manager. 
E)  None of the statements is correct.

Question 16

Match the following statements
-Unrelated business income is generally that derived from the unrelated trade or business, reduced by the deductions directly connected with the conduct of the unrelated trade or business.

Accepted Answer

A) Exempt from tax on unrelated business. 
B) Inappropriate definition. 
C) Exempt organization may be subject to the tax on unrelated business income. 
D) Annual information return of an exempt organization that is required to file a return and which is not a private foundation. 
E) Appropriate definition.f.Annual information return of a private foundation. 
A) Exempt from tax on unrelated business. 
B) Inappropriate definition. 
C) Exempt organization may be subject to the tax on unrelated business income. 
D) Annual information return of an exempt organization that is required to file a return and which is not a private foundation. 
E) Appropriate definition.f.Annual information return of a private foundation.

Question 17

Only certain exempt organizations must obtain IRS approval to obtain exempt status.

Accepted Answer

A) True 
 B)False

Question 18

All organizations that are exempt from Federal income tax are exempt under § 501(c)(3).

Accepted Answer

A) True 
 B)False

Question 19

Even though a church is not required to obtain IRS approval of its exempt status, it still annually must file a Form 990.

Accepted Answer

A) True 
 B)False

Question 20

For each of the following taxes which are imposed on private foundations and/or Foundation Managers, match the appropriate initial tax or additional tax
-Tax on jeopardizing investments

Accepted Answer

A) 5% initial tax and 25% additional tax on private foundation. 
B) 15% initial tax and 100% additional tax on private foundation. 
C) 100% additional tax on private foundation and 50% additional tax on foundation manager. 
D) 5% initial tax and 200% additional tax on private foundation. 
E) 5% initial tax and 200% additional tax on the disqualified person. 
A) 5% initial tax and 25% additional tax on private foundation. 
B) 15% initial tax and 100% additional tax on private foundation. 
C) 100% additional tax on private foundation and 50% additional tax on foundation manager. 
D) 5% initial tax and 200% additional tax on private foundation. 
E) 5% initial tax and 200% additional tax on the disqualified person.

If the unrelated business income of an exempt organization is $25,000 or less, the unrelated business income tax (UBIT) will be $0.

Which of the following statements regarding intermediate sanctions is correct?

Match the following tax forms -Form 4720

Match the following statements -Tax on self-dealing

Certain § 501(c)(3) exempt organizations are permitted to engage in lobbying activities in the same manner as taxable organizations.

A § 501(c)(3) organization that otherwise would be classified as a private foundation can avoid such classification if it satisfies:

Match the following tax forms -Form 1023

Engaging in a prohibited transaction can result in an exempt organization being subject to Federal income tax, but cannot cause it to lose its exempt status unless the exempt organization repeats the prohibited transaction.

If an exempt organization conducts a trade or business that consists of either exchanging or renting to other exempt organizations the organization's donor or membership list, such trade or business is an unrelated trade or business.

Discuss benefits for which an exempt organization may be eligible, other than exemption from Federal income tax.

Revenue generated by an exempt organization from the distribution of low-cost items is not income from an unrelated trade or business.

Give an example of the indicated types of exempt organizations -Not an exempt organization

Teal, Inc., is a private foundation which failed to distribute an adequate amount of income for the exempt purpose of Teal. Which of the following statements is correct?

Match the following statements -Unrelated business income is generally that derived from the unrelated trade or business, reduced by the deductions directly connected with the conduct of the unrelated trade or business.

Only certain exempt organizations must obtain IRS approval to obtain exempt status.

All organizations that are exempt from Federal income tax are exempt under § 501(c)(3).

Even though a church is not required to obtain IRS approval of its exempt status, it still annually must file a Form 990.

For each of the following taxes which are imposed on private foundations and/or Foundation Managers, match the appropriate initial tax or additional tax -Tax on jeopardizing investments

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 15: Exempt Entities

If the unrelated business income of an exempt organization is $25,000 or less, the unrelated business income tax (UBIT) will be $0.

Which of the following statements regarding intermediate sanctions is correct?

Match the following tax forms -Form 4720

Match the following statements -Tax on self-dealing

Certain § 501(c)(3) exempt organizations are permitted to engage in lobbying activities in the same manner as taxable organizations.

A § 501(c)(3) organization that otherwise would be classified as a private foundation can avoid such classification if it satisfies:

Match the following tax forms -Form 1023

Engaging in a prohibited transaction can result in an exempt organization being subject to Federal income tax, but cannot cause it to lose its exempt status unless the exempt organization repeats the prohibited transaction.

If an exempt organization conducts a trade or business that consists of either exchanging or renting to other exempt organizations the organization's donor or membership list, such trade or business is an unrelated trade or business.

Discuss benefits for which an exempt organization may be eligible, other than exemption from Federal income tax.

Revenue generated by an exempt organization from the distribution of low-cost items is not income from an unrelated trade or business.

Give an example of the indicated types of exempt organizations -Not an exempt organization

Teal, Inc., is a private foundation which failed to distribute an adequate amount of income for the exempt purpose of Teal. Which of the following statements is correct?

Match the following statements -Unrelated business income is generally that derived from the unrelated trade or business, reduced by the deductions directly connected with the conduct of the unrelated trade or business.

Only certain exempt organizations must obtain IRS approval to obtain exempt status.

All organizations that are exempt from Federal income tax are exempt under § 501(c)(3).

Even though a church is not required to obtain IRS approval of its exempt status, it still annually must file a Form 990.

For each of the following taxes which are imposed on private foundations and/or Foundation Managers, match the appropriate initial tax or additional tax -Tax on jeopardizing investments

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters