Question 1

While the major objective of the Federal income tax law is to raise revenue, social considerations and economic objectives also affect the tax law.

Accepted Answer

A) True 
 B)False

Question 2

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 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 100% additional tax on disqualified person. 
E) 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 100% additional tax on disqualified person. 
E) 10% initial tax and 200% additional tax on the disqualified person.

Question 3

Which requirements must be satisfied for an exempt organization to be classified as an unrelated trade or business?
Is being classified as an unrelated trade or business good or bad?

Accepted Answer

If the following requirements are satisf

Question 4

Faith Church, a § 501(c)(3) organization, operates a bingo game two times each week to raise money to support the youth activities of the church. For the current year, net proceeds from the bingo game are $900,000.
a.
Determine the tax consequences for Faith Church if the bingo game is conducted in a jurisdiction where for-profit bingo games are illegal and where the bingo game is legal for exempt entities.
b.
Determine the tax consequences for Faith Church if the bingo game is conducted in a jurisdiction where bingo games are legal for both for-profit and exempt entities.

Accepted Answer

a. In this case, the $900,000 is exempt

Question 5

For purposes of the unrelated business income tax (UBIT), a trade or business consists of any activity conducted for the production of income through the sale of merchandise, or from the performance of services for which profits have been earned during at least three of the five previous years.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements regarding the unrelated business income tax is correct?

Accepted Answer

A)  Private foundations are subject to the unrelated business income tax. 
B)  Bingo games are not subject to the unrelated business income tax if they are conducted by an exempt organization. 
C)  The exchange or rental of membership lists with other exempt and nonexempt organizations is not an unrelated trade or business. 
D)  All of these statements are correct. 
E)  None of these statements is correct. 
A)  Private foundations are subject to the unrelated business income tax. 
B)  Bingo games are not subject to the unrelated business income tax if they are conducted by an exempt organization. 
C)  The exchange or rental of membership lists with other exempt and nonexempt organizations is not an unrelated trade or business. 
D)  All of these statements are correct. 
E)  None of these statements is correct.

Question 7

Give an example of the indicated types of exempt organizations.
-§ 501(c)(5) labor 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.

Question 8

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 9

If personal property is leased with real property and more than 45% of the rent income under the lease is from personal property, all of the rent income is subject to the unrelated business income tax.

Accepted Answer

A) True 
 B)False

While the major objective of the Federal income tax law is to raise revenue, social considerations and economic objectives also affect the tax law.

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 jeopardizing investments

Which requirements must be satisfied for an exempt organization to be classified as an unrelated trade or business? Is being classified as an unrelated trade or business good or bad?

For purposes of the unrelated business income tax (UBIT), a trade or business consists of any activity conducted for the production of income through the sale of merchandise, or from the performance of services for which profits have been earned during at least three of the five previous years.

Which of the following statements regarding the unrelated business income tax is correct?

Give an example of the indicated types of exempt organizations. -§ 501(c)(5) labor organization

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

If personal property is leased with real property and more than 45% of the rent income under the lease is from personal property, all of the rent income is subject to the unrelated business income tax.

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

Filters

Exam 23: Exempt Entities

While the major objective of the Federal income tax law is to raise revenue, social considerations and economic objectives also affect the tax law.

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 jeopardizing investments

Which requirements must be satisfied for an exempt organization to be classified as an unrelated trade or business? Is being classified as an unrelated trade or business good or bad?

For purposes of the unrelated business income tax (UBIT), a trade or business consists of any activity conducted for the production of income through the sale of merchandise, or from the performance of services for which profits have been earned during at least three of the five previous years.

Which of the following statements regarding the unrelated business income tax is correct?

Give an example of the indicated types of exempt organizations. -§ 501(c)(5) labor organization

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

If personal property is leased with real property and more than 45% of the rent income under the lease is from personal property, all of the rent income is subject to the unrelated business income tax.

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

Filters