Question 1

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.

Question 2

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

Accepted Answer

A)  Federal agencies. 
B)  Churches. 
C)  Exempt organizations whose annual gross receipts do not exceed $50,000. 
D)  Private foundations. 
E)  None of these entities must file Form 990. 
A)  Federal agencies. 
B)  Churches. 
C)  Exempt organizations whose annual gross receipts do not exceed $50,000. 
D)  Private foundations. 
E)  None of these entities must file Form 990.

Question 3

General requirements for exempt status include the organization serving the common good and the organization being a not-for-profit entity.

Accepted Answer

A) True 
 B)False

Question 4

One of the requirements for an exempt organization to be classified as an unrelated trade or business is that the trade or business is not substantially related to the exempt purpose of the organization. How can an exempt organization avoid satisfying this requirement?

Accepted Answer

To avoid satisfying this requirement, th

Question 5

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

Accepted Answer

A) Exempt from tax on unrelated business. 
B) Inappropriate definition. 
C) Exempt organization may be subject to the tax on unrelated business income. 
D) Annual information return of an exempt organization that is required to file a return and which is not a private foundation. 
E) Appropriate definition.
F)Annual information return of a private foundation. 
A) Exempt from tax on unrelated business. 
B) Inappropriate definition. 
C) Exempt organization may be subject to the tax on unrelated business income. 
D) Annual information return of an exempt organization that is required to file a return and which is not a private foundation. 
E) Appropriate definition.
F)Annual information return of a private foundation.

Question 6

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 7

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

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 9

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

Accepted Answer

A) True 
 B)False

Question 10

Help, Inc., a tax-exempt organization, incurs lobbying expenses of $275,000 during the tax year. Help is eligible for and makes the § 501h) lobbying expenditure election. During the year, Help spends $1,200,000 carrying out its exempt mission.
a. Will the lobbying expense result in Help losing its exempt status?
b. Calculate the amount of any tax that Help must pay associated with its lobbying expenses.

Accepted Answer

a. No. Help is not in danger of losing i

Question 11

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 12

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

Accepted Answer

If an exempt organization conducts a tra

Question 13

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

Accepted Answer

A bingo game is not an unrelated trade o

Question 14

A feeder organization is an exempt organization that provides funding for nutritional programs for children.

Accepted Answer

A) True 
 B)False

Question 15

All of the stock of Hot Dog, Inc., a fast-food franchise operating in nine southeastern states, is owned by Winsome America, Inc., a § 501c)3) organization. The stock was received last year as an inheritance from Rob, the entrepreneur who founded the chain.
During the current year, Hot Dog reports profits before taxes and taxable income of $8 million. Hot Dog distributes
$5 million to its parent, and it retains the balance for expansion purposes.
a. What are the tax consequences to Hot Dog and to Winsome America?
a. change if Hot Dog distributes $8 million to Winsome, rather than $5 million?
b. How would your answer in

Accepted Answer

a. Hot Dog is a feeder organization. The

Question 16

First Americans, Inc., a § 501c)3) organization, operates a museum that depicts the lives of a tribe of Native Americans. It charges an admission fee but also finances its operations through endowment income, contributions, and gift shop sales. The gift shop is operated by 50 volunteers and the museum is operated by 15 employees. Revenue by source is: $\begin{array}{lr}
\text { Admission fees } & \$ 700,000 \
\text { Endowment income } & 75,000 \
\text { Gift shop net income } & 300,000 \
\text { Contributions } & 100,000
\end{array}$

a. Determine the amount of First Americans' unrelated business income UBI).
b. Determine the amount of First American's unrelated business income tax UBIT).

Accepted Answer

Thus, First Americans, Inc., r

Question 17

Maroon, Inc., a tax-exempt organization, leases a building and equipment to Brown Partnership. The rental income from the building is $100,000 and from the equipment is $9,000. Rental expenses are $40,000 for the building and $4,000 for the equipment. What adjustment must be made to net unrelated business income?

Accepted Answer

A)  $-0- 
B)  $60,000) 
C)  $65,000) 
D)  $109,000) 
A)  $-0- 
B)  $60,000) 
C)  $65,000) 
D)  $109,000)

Question 18

To provide the greatest Federal income tax benefits for its donors, Orchestra would prefer to be a:

Accepted Answer

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

Question 19

The trade or business of selling merchandise where substantially all of the merchandise has been received as contributions or gifts is not subject to the unrelated business income tax.

Accepted Answer

A) True 
 B)False

Question 20

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.

Accepted Answer

A) True 
 B)False

Which of the following attributes are associated with exempt organizations?

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

General requirements for exempt status include the organization serving the common good and the organization being a not-for-profit entity.

One of the requirements for an exempt organization to be classified as an unrelated trade or business is that the trade or business is not substantially related to the exempt purpose of the organization. How can an exempt organization avoid satisfying this requirement?

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

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

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

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

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

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

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

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

A feeder organization is an exempt organization that provides funding for nutritional programs for children.

To provide the greatest Federal income tax benefits for its donors, Orchestra would prefer to be a:

The trade or business of selling merchandise where substantially all of the merchandise has been received as contributions or gifts is not subject to the unrelated business income tax.

Understanding and Working With the Federal Tax Law

The Deduction for Qualified Business Income for Pass-Through Entities

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Earnings and Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operations, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 15: Exempt Entities

Which of the following attributes are associated with exempt organizations?

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

General requirements for exempt status include the organization serving the common good and the organization being a not-for-profit entity.

One of the requirements for an exempt organization to be classified as an unrelated trade or business is that the trade or business is not substantially related to the exempt purpose of the organization. How can an exempt organization avoid satisfying this requirement?

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

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

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

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

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

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

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

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

A feeder organization is an exempt organization that provides funding for nutritional programs for children.

To provide the greatest Federal income tax benefits for its donors, Orchestra would prefer to be a:

The trade or business of selling merchandise where substantially all of the merchandise has been received as contributions or gifts is not subject to the unrelated business income tax.

Understanding and Working With the Federal Tax Law

The Deduction for Qualified Business Income for Pass-Through Entities

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Earnings and Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operations, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters