Question 1

If an exempt organization conducts a trade or business that is regularly carried on by the organization,it is subject to the unrelated business income tax (UBIT).

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not an example of an exempt organization?

Accepted Answer

A) Religious,charitable,or educational organization. 
B) Voluntary employees' beneficiary association. 
C) Labor,agricultural,or horticultural organization. 
D) Stock exchange. 
E) All of the above can be exempt from tax. 
A) Religious,charitable,or educational organization. 
B) Voluntary employees' beneficiary association. 
C) Labor,agricultural,or horticultural organization. 
D) Stock exchange. 
E) All of the above can be exempt from tax.

Question 3

Robin,Inc. ,an exempt organization,acquired a building for $400,000 which it will lease to ABC,Inc. ,for $40,000 annually.To finance the acquisition of the building,Robin secures a mortgage on it of $250,000.Advise Robin as to whether it has any unrelated debt-financed income or deductions.

Accepted Answer

The building is appropriately classified

Question 4

Theater,Inc. ,an exempt organization,owns a printing company,Printers,Inc. ,which remits 85% of its profits to Theater,Inc.Since Printers remits at least 85% of its profits to Theater,neither Theater,Inc. ,nor Printers,Inc. ,must pay income tax on this $85,000 ($100,000 × 85%).

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

Intermediate sanctions apply to so-calle

Question 6

An exempt organization owns a building for which its adjusted basis is $100,000 at the beginning of the year and $90,000 at the end of the year.One-half of the ground floor is leased to a commercial venture for $10,000 per year.The remainder of the first floor and all of the second floor are used by the exempt organization in carrying out its mission.When the exempt organization constructed the building 20 years ago,it incurred a mortgage of $150,000.The final payment of this mortgage was made in December of the current year.The average acquisition indebtedness for the current year is $30,000.Determine to what extent the building is debt-financed property,the amount of debt-financed income,and the portion of debt-financed income that is treated as unrelated business income.

Accepted Answer

The building is not classified as debt-f

Question 7

Certain § 501(c)(3) exempt organizations are permitted to engage in lobbying activities on a limited basis.An example of such an exempt organization is a church.

Accepted Answer

A) True 
 B)False

Question 8

Match the following statements.
a.May be subject to some Federal income taxation and classification may adversely affect amount of charitable contributions received.b.Tax imposed for engaging in transactions with disqualified persons.c.Tax imposed on investments that enable a private foundation to control unrelated for-profit businesses.
-Tax on excess business holdings

Accepted Answer

The answer of Match the following statements.
a.May be subject to...

Question 9

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 10

Only certain exempt organizations must obtain IRS approval to obtain exempt status.

Accepted Answer

A) True 
 B)False

Question 11

Teal,Inc. ,is a private foundation which failed to distribute an adequate amount of income for the exempt purpose of Teal.Which of the following statements is correct?

Accepted Answer

A) An excise tax in the form of an initial tax at the rate of 5% may be imposed on Teal. 
B) An excise tax in the form of an initial tax at the rate of 2.5% may be imposed on the foundation manager. 
C) An excise tax in the form of an additional tax at the rate of 100% may be imposed on Teal. 
D) An excise tax in the form of an additional tax at the rate of 50% may be imposed on the foundation manager. 
E) None of the statements is correct. 
A) An excise tax in the form of an initial tax at the rate of 5% may be imposed on Teal. 
B) An excise tax in the form of an initial tax at the rate of 2.5% may be imposed on the foundation manager. 
C) An excise tax in the form of an additional tax at the rate of 100% may be imposed on Teal. 
D) An excise tax in the form of an additional tax at the rate of 50% may be imposed on the foundation manager. 
E) None of the statements is correct.

Question 12

Match the following tax forms.
a.Return of Private Foundation.b.Application for Recognition of Exemption under § 501(c)(3).c.Return of Organization Exempt from Income Tax.d.Return of Certain Excise Taxes on Charities and Other Persons under Chapters 41 and 42 of the Internal Revenue Code.e.Application for Recognition of Exemption under § 501(a).f.Application for Extension of Time.
-Form 990-PF

Accepted Answer

The answer of Match the following tax forms.
a.Return of Private...

Question 13

Match the following tax forms.
a.Return of Private Foundation.b.Application for Recognition of Exemption under § 501(c)(3).c.Return of Organization Exempt from Income Tax.d.Return of Certain Excise Taxes on Charities and Other Persons under Chapters 41 and 42 of the Internal Revenue Code.e.Application for Recognition of Exemption under § 501(a).f.Application for Extension of Time.
-Form 4720

Accepted Answer

The answer of Match the following tax forms.
a.Return of Private...

Question 14

What is the purpose of the unrelated business income tax?

Accepted Answer

The unrelated business income tax is des

Question 15

An exempt entity in no circumstance is subject to Federal income tax.

Accepted Answer

A) True 
 B)False

Question 16

Garden,Inc. ,a qualifying § 501(c)(3) organization,incurs lobbying expenditures of $210,000 during the taxable year.Exempt purpose expenditures are $900,000.If Garden makes the election under § 501(h) to make lobbying expenditures on a limited basis,its tax liability resulting from the lobbying expenditures is:

Accepted Answer

A) $0. 
B) $12,500. 
C) $50,000. 
D) $60,000. 
E) None of the above. 
A) $0. 
B) $12,500. 
C) $50,000. 
D) $60,000. 
E) None of the above.

Question 17

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

Accepted Answer

​
 The tax model for unrelated business

Question 18

A § 501(c)(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 19

Define average acquisition indebtedness with respect to debt-financed property.

Accepted Answer

Average acquisition indebtedness is the

Question 20

Blue,Inc. ,receives its support from the following sources. Governmental unit A,for services rendered $18,000 General public,for services rendered 25,000 Gross investment income 8,000 Contributions from individual substantial contributors (disqualified persons) 19,000 Which of the following statements is correct?

Accepted Answer

A) Blue,Inc. ,is a private foundation because it satisfies the external support test and fails the internal support test. 
B) Blue,Inc. ,is not a private foundation because it fails both the internal and external support tests. 
C) Blue,Inc. ,is a private foundation because it satisfies both the external support test and the internal support test. 
D) Blue,Inc. ,is not a private foundation because it satisfies both the external support test and the internal support test. 
E) None of the statements is true. 
A) Blue,Inc. ,is a private foundation because it satisfies the external support test and fails the internal support test. 
B) Blue,Inc. ,is not a private foundation because it fails both the internal and external support tests. 
C) Blue,Inc. ,is a private foundation because it satisfies both the external support test and the internal support test. 
D) Blue,Inc. ,is not a private foundation because it satisfies both the external support test and the internal support test. 
E) None of the statements is true.

Exam 23: Exempt Entities

If an exempt organization conducts a trade or business that is regularly carried on by the organization,it is subject to the unrelated business income tax (UBIT).

Which of the following is not an example of an exempt organization?

Robin,Inc. ,an exempt organization,acquired a building for $400,000 which it will lease to ABC,Inc. ,for $40,000 annually.To finance the acquisition of the building,Robin secures a mortgage on it of $250,000.Advise Robin as to whether it has any unrelated debt-financed income or deductions.

Theater,Inc. ,an exempt organization,owns a printing company,Printers,Inc. ,which remits 85% of its profits to Theater,Inc.Since Printers remits at least 85% of its profits to Theater,neither Theater,Inc. ,nor Printers,Inc. ,must pay income tax on this $85,000 ($100,000 × 85%).

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

Certain § 501(c)(3) exempt organizations are permitted to engage in lobbying activities on a limited basis.An example of such an exempt organization is a church.

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

Only certain exempt organizations must obtain IRS approval to obtain exempt status.

Teal,Inc. ,is a private foundation which failed to distribute an adequate amount of income for the exempt purpose of Teal.Which of the following statements is correct?

What is the purpose of the unrelated business income tax?

An exempt entity in no circumstance is subject to Federal income tax.

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

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

Define average acquisition indebtedness with respect to debt-financed property.

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