Question 1

Personal property rental income is subject to and real property rental income is not subject to the unrelated business income tax.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Even though a church is not required to obtain IRS approval of its exempt status,it still annually must file a Form 990.

Accepted Answer

A) True 
 B)False

Question 4

The due date for the Exempt Organization Business Income Tax Return (Form 990-T) is the fifteenth day of the third month after the end of the taxable year.

Accepted Answer

A) True 
 B)False

Question 5

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 and are not imposed on exempt organizations classified as public charities.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) Only an external support test. 
B) Only an internal support test. 
C) Both an external support test and an internal support test. 
D) An external support test,an internal support test,and a good faith test. 
E) None of the above. 
A) Only an external support test. 
B) Only an internal support test. 
C) Both an external support test and an internal support test. 
D) An external support test,an internal support test,and a good faith test. 
E) None of the above.

Question 7

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 two of the five previous years.

Accepted Answer

A) True 
 B)False

Question 8

Why are some organizations exempt from Federal income tax?

Accepted Answer

The Code's treatment of exempt organizat

Question 9

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 10

Define "trade or business" for purposes of the unrelated business income tax (UBIT).

Accepted Answer

Trade or business,for purposes of the UB

Question 11

What are the common characteristics of organizations that receive exempt status?

Accepted Answer

Many organizations that qualify for exem

Question 12

Medical,Inc. ,a § 501(c)(3) exempt organization,engages in an excess benefit transaction.The amount of the excess benefit is $50,000.For the organization management,the participation in the excess benefit transaction was not willful and was due to reasonable cause.Calculate the amount of the excise tax (first-level tax) imposed under the intermediate sanctions provision.

Accepted Answer

Under the intermediate sanctions provisi

Question 13

For purposes of the unrelated business income tax (UBIT),land that is acquired by the exempt organization for later exempt-use is excluded from the definition of debt-financed property if certain requirements are satisfied.Which of the following is not included in the requirements?

Accepted Answer

A) The principal purpose of acquiring the land is for use (substantially all) in achieving the organization's exempt purpose. 
B) The fair market value of the land is not over 50% of the fair market value of land presently owned by the exempt organization. 
C) The use of the land by the exempt organization will begin within ten years of the acquisition date. 
D) At the date the land is acquired,it is located in the neighborhood of other property of the organization for which substantially all the use is for achieving the organization's exempt purpose. 
E) All of the above are requirements. 
A) The principal purpose of acquiring the land is for use (substantially all) in achieving the organization's exempt purpose. 
B) The fair market value of the land is not over 50% of the fair market value of land presently owned by the exempt organization. 
C) The use of the land by the exempt organization will begin within ten years of the acquisition date. 
D) At the date the land is acquired,it is located in the neighborhood of other property of the organization for which substantially all the use is for achieving the organization's exempt purpose. 
E) All of the above are requirements.

Question 14

Give an example of the indicated types of exempt organizations.
a.League of Women Voters.b.Teachers' association.c.American Plywood Association.d.Six Flags over Texas theme park.e.Salvation Army.
-Not an exempt organization

Accepted Answer

The answer of Give an example of the indicated types...

Question 15

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

Accepted Answer

A) To be subject to the UBIT,the exempt organization must conduct a trade or business,the trade or business is not substantially related to the exempt purpose of the organization,and the trade or business is regularly carried on by the organization. 
B) To be subject to the UBIT,the exempt organization must conduct a trade or business,the trade or business must be substantially related to the exempt purpose of the organization,and the trade or business must be regularly carried on by the organization. 
C) To be subject to the UBIT,the exempt organization must conduct a trade or business,the trade or business is not substantially related to the exempt purpose of the organization,and the trade or business is carried on during more than half the year. 
D) An exempt entity that conducts a business that competes with for-profit businesses automatically is subject to the UBIT. 
E) None of the above statements is correct. 
A) To be subject to the UBIT,the exempt organization must conduct a trade or business,the trade or business is not substantially related to the exempt purpose of the organization,and the trade or business is regularly carried on by the organization. 
B) To be subject to the UBIT,the exempt organization must conduct a trade or business,the trade or business must be substantially related to the exempt purpose of the organization,and the trade or business must be regularly carried on by the organization. 
C) To be subject to the UBIT,the exempt organization must conduct a trade or business,the trade or business is not substantially related to the exempt purpose of the organization,and the trade or business is carried on during more than half the year. 
D) An exempt entity that conducts a business that competes with for-profit businesses automatically is subject to the UBIT. 
E) None of the above statements is correct.

Question 16

Hope,Inc. ,an exempt organization,owns a factory building that it leases to a taxable corporation for $100,000 per year.Related expenses for Hope are $30,000.Hope's average acquisition indebtedness on the building is $400,000 and the average adjusted basis is $600,000.Calculate Hope's unrelated debt-financed income and expenses.Then indicate the effect of these items on unrelated business taxable income.

Accepted Answer

The income from the factory building is

Question 17

Match the following statements.
a.Distribution of such items is not considered an unrelated trade or business if they are "low-cost items".b.Is considered an unrelated trade or business if the amount received is contingent upon the level of attendance at one or more events, broadcast ratings, or other factors indicating the degree of public exposure to one or more events.c.Is considered an unrelated trade or business if can be conducted by commercial (for-profit) entities.d.A trade or business that consists of either renting or exchanging these with another exempt organization is not an unrelated trade or business.
-Bingo games

Accepted Answer

The answer of Match the following statements.
a.Distribution of such items...

Question 18

How can an exempt organization,otherwise classified as a private foundation,become a public charity?

Accepted Answer

An exempt organization that otherwise wo

Question 19

What are the excise taxes imposed on private foundations,and why are they imposed?

Accepted Answer

The excise taxes imposed on private foun

Question 20

Are organizations that qualify for exempt organization status completely exempt from Federal income taxation?

Accepted Answer

No.Such organizations may be only partia

Exam 23: Exempt Entities

Personal property rental income is subject to and real property rental income is not subject to the unrelated business income tax.

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.

Even though a church is not required to obtain IRS approval of its exempt status,it still annually must file a Form 990.

The due date for the Exempt Organization Business Income Tax Return (Form 990-T) is the fifteenth day of the third month after the end of the taxable year.

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 and are not imposed on exempt organizations classified as public charities.

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

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 two of the five previous years.

Why are some organizations exempt from Federal income tax?

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

Define "trade or business" for purposes of the unrelated business income tax (UBIT).

What are the common characteristics of organizations that receive exempt status?

For purposes of the unrelated business income tax (UBIT),land that is acquired by the exempt organization for later exempt-use is excluded from the definition of debt-financed property if certain requirements are satisfied.Which of the following is not included in the requirements?

Give an example of the indicated types of exempt organizations. a.League of Women Voters.b.Teachers' association.c.American Plywood Association.d.Six Flags over Texas theme park.e.Salvation Army. -Not an exempt organization

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

How can an exempt organization,otherwise classified as a private foundation,become a public charity?

What are the excise taxes imposed on private foundations,and why are they imposed?

Are organizations that qualify for exempt organization status completely exempt from Federal income taxation?

An Introduction to Taxation and Understanding the 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 Nontaxabl

Property Transactions: Capital Gains and Losses, section 1231 and Recapture Provisions

Alternative Minimum Tax

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

Family Tax Planning

Income Taxation of Trusts and Estates

Filters