Question 1

A § 501(c)(3) exempt organization (excluding churches and private foundations) must make available to the general public its current Form 990.

Accepted Answer

A) True 
 B)False

Question 2

An exempt entity is not subject to any Federal income tax.

Accepted Answer

A) True 
 B)False

Question 3

Match the following tax forms.
-Form 1024

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 4

Describe how a public charity can be eligible to make lobbying expenditures without losing its tax exemption.

Accepted Answer

Public charities generally are not permi

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Match the following statements.
-Tax on excess business holdings

Accepted Answer

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

Question 7

The tax consequences to a donor of making a charitable contribution to a private foundation may be less favorable than the tax consequences to a donor of making a charitable contribution to a public charity.

Accepted Answer

A) True 
 B)False

Question 8

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 $3.95 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 9

For purposes of the unrelated business income tax (UBIT), land that is acquired by the exempt organization for later exempt use is excluded from the definition of debt-financed property if certain requirements are satisfied. Which of the following is not a requirement?

Accepted Answer

A)  The principal purpose of acquiring the land is for use (substantially all) in achieving the organization's exempt purpose. 
B)  The fair market value of the land is not over 50% of the fair market value of land presently owned by the exempt organization. 
C)  The use of the land by the exempt organization will begin within 10 years of the acquisition date. 
D)  At the date the land is acquired, it is located in the neighborhood of other property of the organization for which substantially all the use is for achieving the organization's exempt purpose. 
A)  The principal purpose of acquiring the land is for use (substantially all) in achieving the organization's exempt purpose. 
B)  The fair market value of the land is not over 50% of the fair market value of land presently owned by the exempt organization. 
C)  The use of the land by the exempt organization will begin within 10 years of the acquisition date. 
D)  At the date the land is acquired, it is located in the neighborhood of other property of the organization for which substantially all the use is for achieving the organization's exempt purpose.

Question 10

What tax forms are used to apply for exempt status? Be specific.

Accepted Answer

An organization that is exempt under § 5

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

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

Accepted Answer

A) True 
 B)False

Question 13

Identify the components of the tax model for unrelated business taxable income.

Accepted Answer

The tax model for unrelated business tax

Question 14

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 15

Why are some organizations exempt from Federal income tax?

Accepted Answer

The Code's treatment of exempt organizat

Question 16

All organizations that are exempt from Federal income tax are "charities."

Accepted Answer

A) True 
 B)False

Question 17

Are organizations that qualify for exempt organization status completely exempt from Federal income taxation?

Accepted Answer

No. Such organizations may be only parti

Question 18

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 19

By default, an exempt entity is a:

Accepted Answer

A)  Public charity. 
B)  Private foundation. 
C)  Private charity. 
D)  Feeder organization. 
A)  Public charity. 
B)  Private foundation. 
C)  Private charity. 
D)  Feeder organization.

Question 20

Which of the following attributes are associated with exempt organizations?

Accepted Answer

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

Exam 23: Exempt Entities

A § 501(c)(3) exempt organization (excluding churches and private foundations) must make available to the general public its current Form 990.

An exempt entity is not subject to any Federal income tax.

Match the following tax forms. -Form 1024

Describe how a public charity can be eligible to make lobbying expenditures without losing its tax exemption.

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

Match the following statements. -Tax on excess business holdings

The tax consequences to a donor of making a charitable contribution to a private foundation may be less favorable than the tax consequences to a donor of making a charitable contribution to a public charity.

For purposes of the unrelated business income tax (UBIT), land that is acquired by the exempt organization for later exempt use is excluded from the definition of debt-financed property if certain requirements are satisfied. Which of the following is not a requirement?

What tax forms are used to apply for exempt status? Be specific.

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

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

Identify the components of the tax model for unrelated business taxable income.

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.

Why are some organizations exempt from Federal income tax?

All organizations that are exempt from Federal income tax are "charities."

Are organizations that qualify for exempt organization status completely exempt from Federal income taxation?

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

By default, an exempt entity is a:

Which of the following attributes are associated with exempt organizations?

Understanding and Working With the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions

Taxing Business Income

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

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