Question 1

A § 501(c)(3) organization exchanges its membership lists with another exempt organization. What are the Federal income tax consequences?

Accepted Answer

If an exempt organization conducts a tra

Question 2

The trade or business of selling merchandise where substantially all of the merchandise has been received as contributions or gifts is not subject to the unrelated business income tax.

Accepted Answer

A) True 
 B)False

Question 3

The excise tax imposed on a private foundation's investment income can be imposed as an initial (first-level) tax but cannot be imposed as an additional (second-level) tax.

Accepted Answer

A) True 
 B)False

Question 4

The income from a bingo game or a casino game conducted by an exempt organization may be unrelated business income.

Accepted Answer

A) True 
 B)False

Question 5

Spirit, Inc., a § 501(c)(3) organization, is classified as a private foundation. It reports investment income of $175,000. Calculate Spirit's tax on its investment income.

Accepted Answer

The answer of Spirit, Inc., a § 501(c)(3) organization, is...

Question 6

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) 10% initial tax and 25% additional tax on private foundation. 
B) 30% initial tax and 100% additional tax on private foundation. 
C) 10% initial tax and 200% additional tax on private foundation. 
D) 10% initial tax and 200% additional tax on the disqualified person. 
A) 10% initial tax and 25% additional tax on private foundation. 
B) 30% initial tax and 100% additional tax on private foundation. 
C) 10% initial tax and 200% additional tax on private foundation. 
D) 10% initial tax and 200% additional tax on the disqualified person.

Question 7

Define a qualified corporate sponsorship payment.

Accepted Answer

A payment qualifies as a qualified spons

Question 8

Certain § 501(c)(3) exempt organizations are permitted to engage in lobbying activities on a limited basis. An example of such an exempt organization is a church.

Accepted Answer

A) True 
 B)False

Question 9

A feeder organization is exempt from Federal income taxation because it carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt entity.

Accepted Answer

A) True 
 B)False

Question 10

A church is one of the types of exempt organizations.

Accepted Answer

A) True 
 B)False

Question 11

Describe how an exempt organization can be eligible to make lobbying expenditures without losing its tax exemption.

Accepted Answer

Certain exempt organizations are permitt

Question 12

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.

Question 13

Garden, Inc., a qualifying § 501(c)(3) organization, incurs lobbying expenditures of $210,000 during the taxable year. Exempt purpose expenditures are $900,000. If Garden makes the election under § 501(h) to make lobbying expenditures on a limited basis, its tax liability resulting from the lobbying expenditures is:

Accepted Answer

A) $0. 
B) $12,500. 
C) $50,000. 
D) $60,000. 
E) None of the above. 
A) $0. 
B) $12,500. 
C) $50,000. 
D) $60,000. 
E) None of the above.

Question 14

The tax consequences to a donor of making a charitable contribution to an exempt organization classified as a private foundation may be less favorable than the tax consequences to a donor of making a charitable contribution to an exempt organization that is not classified as a private foundation.

Accepted Answer

A) True 
 B)False

Question 15

Match the following statements.
-Private foundation

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 16

Match the following statements.
-Corporate sponsorship payments

Accepted Answer

A) Distribution of such items is not considered an unrelated trade or business if they are "low-cost items". 
B) Is considered an unrelated trade or business if the amount received is contingent upon the level of attendance at one or more events 
C) Is considered an unrelated trade or business if legally it can be conducted by commercial (for-profit) entities. 
D) A trade or business that consists of either renting or exchanging these with another exempt organization is not an unrelated trade or business. 
A) Distribution of such items is not considered an unrelated trade or business if they are "low-cost items". 
B) Is considered an unrelated trade or business if the amount received is contingent upon the level of attendance at one or more events 
C) Is considered an unrelated trade or business if legally it can be conducted by commercial (for-profit) entities. 
D) A trade or business that consists of either renting or exchanging these with another exempt organization is not an unrelated trade or business.

Question 17

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 18

Watch, Inc., a § 501(c)(3) exempt organization, solicits contributions through a mail campaign. An executive, who recently completed an executive MBA degree program, recommends that personal address labels be included as an additional way to motivate the potential donor to contribute. The value of these labels is $9.95 per potential donor. What is the effect of the inclusion of the address labels on Watch's unrelated business income?

Accepted Answer

The address labels are low cost articles

Question 19

Miracle, Inc., is a § 501(c)(3) organization involved in medical research. Based on its expectation that proposed legislation will adversely affect the funding supporting its mission, Miracle hires a lobbyist to work in Washington to represent its views.
​
Miracle is eligible for and thus makes the § 501(h) election. It calculates the lobbying nontaxable amount to be $100,000 ($500,000 exempt purpose expenditures × 20%). The total lobbying expenditures for the year were $115,000. Calculate Miracle's tax on excess lobbying expenditures.

Accepted Answer

Since Miracle's lobbying expenses of $11

Question 20

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 10% may be imposed on Teal. 
B) An excise tax in the form of an initial tax at the rate of 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 10% may be imposed on Teal. 
B) An excise tax in the form of an initial tax at the rate of 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 § 501(c)(3) organization exchanges its membership lists with another exempt organization. What are the Federal income tax consequences?

The trade or business of selling merchandise where substantially all of the merchandise has been received as contributions or gifts is not subject to the unrelated business income tax.

The excise tax imposed on a private foundation's investment income can be imposed as an initial (first-level) tax but cannot be imposed as an additional (second-level) tax.

The income from a bingo game or a casino game conducted by an exempt organization may be unrelated business income.

Spirit, Inc., a § 501(c)(3) organization, is classified as a private foundation. It reports investment income of $175,000. Calculate Spirit's tax on its investment income.

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

Define a qualified corporate sponsorship payment.

Certain § 501(c)(3) exempt organizations are permitted to engage in lobbying activities on a limited basis. An example of such an exempt organization is a church.

A feeder organization is exempt from Federal income taxation because it carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt entity.

A church is one of the types of exempt organizations.

Describe how an exempt organization can be eligible to make lobbying expenditures without losing its tax exemption.

Which of the following statements regarding intermediate sanctions is correct?

The tax consequences to a donor of making a charitable contribution to an exempt organization classified as a private foundation may be less favorable than the tax consequences to a donor of making a charitable contribution to an exempt organization that is not classified as a private foundation.

Match the following statements. -Private foundation

Match the following statements. -Corporate sponsorship payments

Match the following statements. -Tax on self-dealing

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?

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

A § 501(c)(3) organization exchanges its membership lists with another exempt organization. What are the Federal income tax consequences?

The trade or business of selling merchandise where substantially all of the merchandise has been received as contributions or gifts is not subject to the unrelated business income tax.

The excise tax imposed on a private foundation's investment income can be imposed as an initial (first-level) tax but cannot be imposed as an additional (second-level) tax.

The income from a bingo game or a casino game conducted by an exempt organization may be unrelated business income.

Spirit, Inc., a § 501(c)(3) organization, is classified as a private foundation. It reports investment income of $175,000. Calculate Spirit's tax on its investment income.

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

Define a qualified corporate sponsorship payment.

Certain § 501(c)(3) exempt organizations are permitted to engage in lobbying activities on a limited basis. An example of such an exempt organization is a church.

A feeder organization is exempt from Federal income taxation because it carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt entity.

A church is one of the types of exempt organizations.

Describe how an exempt organization can be eligible to make lobbying expenditures without losing its tax exemption.

Which of the following statements regarding intermediate sanctions is correct?

The tax consequences to a donor of making a charitable contribution to an exempt organization classified as a private foundation may be less favorable than the tax consequences to a donor of making a charitable contribution to an exempt organization that is not classified as a private foundation.

Match the following statements. -Private foundation

Match the following statements. -Corporate sponsorship payments

Match the following statements. -Tax on self-dealing

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?

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