Question 1

What is the purpose of the unrelated business income tax?

Accepted Answer

The unrelated business income tax is des

Question 2

Discuss any negative tax consequences that result from an exempt organization being classified as a private foundation.

Accepted Answer

Two potential negative tax consequences

Question 3

The excise taxes such as the tax on self-dealing and the tax on excess business holdings are imposed on exempt organizations classified as private foundations. The taxes are not imposed on exempt organizations classified as public charities.

Accepted Answer

A) True 
 B)False

Question 4

Match the following tax forms.
-Form 990-PF

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) Application for Recognition of Exemption under § 501(a). 
A) Return of Private Foundation. 
B) Application for Recognition of Exemption under § 501(c)(3). 
C) Return of Organization Exempt from Income Tax. 
D) Application for Recognition of Exemption under § 501(a).

Question 5

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 6

The purpose of the excise tax imposed on a private foundation for failure to distribute sufficient levels of income is to motivate the foundation to distribute more of its income for application to exempt purposes.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following exempt organizations are required to file Form 990 (Return of Organization Exempt from Income Tax)?

Accepted Answer

A) Federal agencies. 
B) Churches. 
C) Exempt organizations whose annual gross receipts do not exceed $50,000. 
D) Private foundations. 
E) None of these entities must file Form 990. 
A) Federal agencies. 
B) Churches. 
C) Exempt organizations whose annual gross receipts do not exceed $50,000. 
D) Private foundations. 
E) None of these entities must file Form 990.

Question 8

Tan, Inc., a tax-exempt organization, has $65,000 of net unrelated business income. Total charitable contributions (all associated with the unrelated trade or business) are $7,500. Assuming that the $7,500 was deducted in calculating net unrelated business income, what is Tan's unrelated business taxable income?

Accepted Answer

A) $57,500 
B) $65,250 
C) $66,000 
D) $72,500 
E) Some other amount. 
A) $57,500 
B) $65,250 
C) $66,000 
D) $72,500 
E) Some other amount.

Question 9

Match the following statements.
-The trade or business is not substantially related to the exempt purpose of the organization.

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 10

An intermediate sanction imposed by the IRS on an exempt organization is a greater sanction than revocation of exempt status.

Accepted Answer

A) True 
 B)False

Question 11

Third Church operates a gift shop in its parish house. The total income of the church is $800,000. Of this amount, $300,000 comes from offerings and $500,000 comes from the net income of the gift shop. The gift shop operations are conducted by six full-time, paid employees. Which of the following statements is correct?

Accepted Answer

A) The $800,000 is unrelated business income. 
B) The $500,000 of gift shop net income is unrelated business income. 
C) The $300,000 is unrelated business income because the gift shop is a feeder organization. 
D) None of the $800,000 is unrelated business income. 
E) The unrelated business income tax does not apply to churches. 
A) The $800,000 is unrelated business income. 
B) The $500,000 of gift shop net income is unrelated business income. 
C) The $300,000 is unrelated business income because the gift shop is a feeder organization. 
D) None of the $800,000 is unrelated business income. 
E) The unrelated business income tax does not apply to churches.

Question 12

How can an exempt organization, otherwise classified as a private foundation, become a public charity?

Accepted Answer

An exempt organization that otherwise wo

Question 13

Which of the following attributes are associated with exempt organizations?

Accepted Answer

A) Organization serves some type of common good. 
B) Organization is not a for profit entity. 
C) Net earnings do not benefit the members of the organization. 
D) Organization does not exert political influence. 
E) All of the above statements are true. 
A) Organization serves some type of common good. 
B) Organization is not a for profit entity. 
C) Net earnings do not benefit the members of the organization. 
D) Organization does not exert political influence. 
E) All of the above statements are true.

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

?   is unrelated bus

Question 15

Define average acquisition indebtedness with respect to debt-financed property.

Accepted Answer

Average acquisition indebtedness is the

Question 16

What are the common characteristics of organizations that receive exempt status?

Accepted Answer

Many organizations that qualify for exem

Question 17

To satisfy the broadly supported provision to avoid classification as a private foundation, the exempt organization must satisfy both an external support test and an internal support test. Under the internal support test, more than one-third of the exempt organization's support for the taxable year must come from gross investment income and unrelated business taxable income.

Accepted Answer

A) True 
 B)False

Question 18

If an exempt organization is required to file an annual information return, on what form is it filed?

Accepted Answer

Exempt organizations that are not privat

Question 19

Agnes is aware that a feeder organization is subject to Federal income taxation. She wonders whether an organization otherwise taxable as a feeder organization can avoid such status if it remits less than 80% of its profits to the § 501(c)(3) entity.

Accepted Answer

No. While a feeder organization carries

Question 20

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.

What is the purpose of the unrelated business income tax?

Discuss any negative tax consequences that result from an exempt organization being classified as a private foundation.

The excise taxes such as the tax on self-dealing and the tax on excess business holdings are imposed on exempt organizations classified as private foundations. The taxes are not imposed on exempt organizations classified as public charities.

Match the following tax forms. -Form 990-PF

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

The purpose of the excise tax imposed on a private foundation for failure to distribute sufficient levels of income is to motivate the foundation to distribute more of its income for application to exempt purposes.

Which of the following exempt organizations are required to file Form 990 (Return of Organization Exempt from Income Tax)?

Match the following statements. -The trade or business is not substantially related to the exempt purpose of the organization.

An intermediate sanction imposed by the IRS on an exempt organization is a greater sanction than revocation of exempt status.

How can an exempt organization, otherwise classified as a private foundation, become a public charity?

Which of the following attributes are associated with exempt organizations?

Define average acquisition indebtedness with respect to debt-financed property.

What are the common characteristics of organizations that receive exempt status?

If an exempt organization is required to file an annual information return, on what form is it filed?

Agnes is aware that a feeder organization is subject to Federal income taxation. She wonders whether an organization otherwise taxable as a feeder organization can avoid such status if it remits less than 80% of its profits to the § 501(c)(3) entity.

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

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

Multi-State Corporate Taxations

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 15: Exempt Entities

What is the purpose of the unrelated business income tax?

Discuss any negative tax consequences that result from an exempt organization being classified as a private foundation.

The excise taxes such as the tax on self-dealing and the tax on excess business holdings are imposed on exempt organizations classified as private foundations. The taxes are not imposed on exempt organizations classified as public charities.

Match the following tax forms. -Form 990-PF

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

The purpose of the excise tax imposed on a private foundation for failure to distribute sufficient levels of income is to motivate the foundation to distribute more of its income for application to exempt purposes.

Which of the following exempt organizations are required to file Form 990 (Return of Organization Exempt from Income Tax)?

Match the following statements. -The trade or business is not substantially related to the exempt purpose of the organization.

An intermediate sanction imposed by the IRS on an exempt organization is a greater sanction than revocation of exempt status.

How can an exempt organization, otherwise classified as a private foundation, become a public charity?

Which of the following attributes are associated with exempt organizations?

Define average acquisition indebtedness with respect to debt-financed property.

What are the common characteristics of organizations that receive exempt status?

If an exempt organization is required to file an annual information return, on what form is it filed?

Agnes is aware that a feeder organization is subject to Federal income taxation. She wonders whether an organization otherwise taxable as a feeder organization can avoid such status if it remits less than 80% of its profits to the § 501(c)(3) entity.

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

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

Multi-State Corporate Taxations

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters