Exam 14: Not-For-Profit Organizations-Regulatory, Taxation, and Performance Issues

The Internal Revenue Service requires that information from the audited financial statements be used to complete the Form 990.

Tax-exempt organizations must complete a Form 990 and send it to the Internal Revenue Service

"Excess benefit transactions" are those in which persons who have substantial influence over the not-for-profit organization engage in transactions that result in economic benefits to them that are excessive,such as unreasonable compensation,sale of assets at bargain prices,and lease arrangements.

A good measure of whether a not-for-profit organization is "liquid" and can meet its short-term obligations is

Only 501(c) (3)organizations receiving at least 50 percent of their support from the public at large rather than a few individual donors can be considered public charities.

All officers of a not-for-profit organization have the same responsibilities to the organization and its constituents.

The federal government's primary objective in regulating not-for-profit organizations through the income tax laws is to limit the number of exempt organizations that operate at any one point in time.

Public disclosure rules require that a tax-exempt not-for-profit organization

Not-for-profit organizations risk loss of their tax-exempt status if they engage in any political activity.

A good measure of whether a not-for-profit organization is operating its programs efficiently is

A tax-exempt organization that receives its support primarily from a large number of individuals or corporations and a relatively small amount from investment income is called a

A 501(c) (3 )organization must provide donors with a written disclosure of the amount of the donation if the donation is $1,000 or more.

The local Kennel Club is a not-for-profit organization with gross receipts of $23,500 for the current tax year.Under the Internal Revenue Service Code,the Kennel Club would be required to file which of the following forms for the tax year?

Describe the difficulty in comparing the financial performance of a not-for-profit organization to other similar organizations.What benchmarks are available to assist in this task?

Political parties and campaign committees can qualify for tax-exempt status.

Not-for-profit corporations cannot lobby or attempt to influence legislation or politicians.

The unrelated business income tax could be a significant cost and therefore should be of concern to tax-exempt organizations.

Intermediate sanctions are often imposed by the Internal Revenue Service,in addition to revoking the tax-exempt status for organizations that confer excessive economic benefits on officers of the organization.

A state has the obligation to monitor and regulate a not-for-profit (NFP)organization because it granted the NFP tax-exempt status through the not-for-profit corporation laws.

Explain the purpose of "intermediate sanctions."