Exam 15: Exempt Entities

Restful, Inc., a § 501c)3) exempt organization, hires a registered lobbyist to promote its position on pending legislation. For the year, its lobbying expenses are $100,000. Restful makes the § 501h) election. The lobbying nontaxable amount is $90,000. a. Will the lobbying expenses result in Restful losing its exempt status? b. Calculate the amount of any tax that Restful must pay associated with the lobbying expenses.

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

By default, an exempt entity is a:

The excise taxes such as the tax on self-dealing and the tax on excess business holdings are imposed on exempt organizations classified as private foundations. The taxes are not imposed on exempt organizations classified as public charities.

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

A church is one of the types of exempt organizations.

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

If an exempt organization distributes "low-cost items" as an incidental part of its solicitation for charitable contributions, the distribution is not considered an unrelated trade or business. a. Under what dollar amount is a distribution no longer a "low-cost item"? b. Provide examples of low-cost items.

The purpose of the excise tax imposed on a private foundation for failure to distribute sufficient levels of income is to motivate the foundation to distribute more of its income for application to exempt purposes.

A § 501c)3) organization that otherwise would be classified as a private foundation can avoid such classification if it satisfies:

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

Certain § 501c)3) exempt organizations are permitted to engage in lobbying activities on an elective, limited basis. Churches are allowed to make this election.

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

Match the following statements. -Corporate sponsorship payments

If an exempt organization conducts a trade or business that consists of either exchanging or renting to other exempt organizations the organization's donor or membership list, such trade or business is an unrelated trade or business.

Which exempt organizations are not required to file an annual Federal tax return?

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

Which of the following statements regarding intermediate sanctions is correct?

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

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