Exam 23: Exempt Entities

Pearl Inc., a tax-exempt organization, leases land, building, and machinery to Purple Partnership for a 5-year period. The rental income from the land and building is $100,000, with related expenses of $40,000. The rental income from the machinery is $9,000 with related expenses of $3,000. What adjustment must be made in computing net unrelated business income?

Debt-financed property consists of all real property of a tax-exempt organization on which there is a mortgage.

Match the following statements. -Membership lists

What are intermediate sanctions and to what types of exempt organizations do they apply?

The Form 990-N:

Under what circumstances are bingo games not treated as an unrelated trade or business?

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

Arbor, Inc., an exempt organization, leases land, building, and machinery to a tenant for a 5-year period. The rent income for the land and building is $400,000 per year and that from the related machinery is $80,000 per year. Expenses incurred by Arbor for the land and building during the year are $60,000, and those for the machinery are $36,000. Net unrelated business income, which includes the above rental income and expenses, is $800,000. Calculate Arbor's unrelated business taxable income.

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

Which of the following statements regarding intermediate sanctions is correct?

Midnight Basketball, Inc., an exempt entity that organizes and conducts basketball games for youths ages 18-25, receives a $20,000 contribution from Brown Shoe Company. Midnight agrees to put Brown's logo on the cover of its monthly newsletter. a. Is the contribution unrelated business income to Midnight? b. Assume that instead of putting Brown's logo on the cover of its newsletter, Midnight agrees to include a statement in the newsletter that youth playing in the games conducted by Midnight wear shoes manufactured only by Brown. Is the contribution unrelated business income to Midnight? b. change if the amount of the payment was $7,500 instead of $20,000? c. Would your answer in

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 excess business holdings

Match the following statements. -Branded tote bags

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

An educational organization such as Williams College that is exempt under § 501(c)(3) cannot be classified as a private foundation if its only sources of revenue are from tuition and alumni contributions.

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

To satisfy the "not-for-profit" requirement for exempt status, the entity may not be engaged in a trade or business.

A corporate sponsorship payment that is contingent on attendance at a sporting event increases the recipient's unrelated business income.

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

Match the following tax forms. -Form 990-PF