Exam 23: Exempt Entities

Medical, Inc., a § 501(c)(3) exempt organization, engages in an excess benefit transaction such that the intermediate sanctions rules may apply. The amount of the excess benefit is $50,000. For the organization management, the participation in the excess benefit transaction was not willful and was supported by reasonable cause. Calculate the amount of the excise tax (first-level tax only) imposed under the intermediate sanctions provision.

Give an example of the indicated types of exempt organizations. -§ 501(c)(6) business league

Match the following statements. -Corporate sponsorship payments

To satisfy the broadly supported provision to avoid classification as a private foundation, an 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.

Match the following statements. -Tax on self-dealing

Define a qualified corporate sponsorship payment.

What are the excise taxes imposed on private foundations, and why are they imposed?

Match the following statements. -Form 990.

Ballet's lobbying nontaxable amount is $600,000. Its lobbying expenditures ceiling is:

Which of the following statements regarding the unrelated business income tax is not correct?

For an exempt organization to be subject to the unrelated business income tax, the trade or business must not be substantially related to the exempt purpose of the organization.

A church is one of the types of exempt organizations.

For each of the following taxes that are imposed on private foundations and/or foundation managers, match the appropriate initial tax or additional tax. -Tax on self-dealing

Chorus reports $20,000 of sales of pizzas at the local high school ballgames this year. Related expenses total $6,000. UBTI equals:

Match the following statements. -Debt-financed income is the net income from investment assets.

Gallery, a public charity, reports annual gross receipts of $100,000 and has total assets of $425,000. It should file a(n):

The Jimenez Group, a private foundation, has been found guilty of self-dealing. To minimize its Federal excise taxes from this activity, Jimenez should:

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

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

Theater, Inc., an exempt organization, owns a printing company, Printers, Inc., that remits 85% of its profits to Theater. Since Printers remits at least 85% of its profits to Theater, neither Theater, nor Printers, must pay income tax on this $85,000 ($100,000 × 85%).