Exam 14: Exempt Entities

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.

Which exempt organizations are not required to file Form 990 (Return of Organization Exempt from Income Tax)?

Which of the following statements regarding the disclosure Regulations is correct?

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.

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. e.Application for Recognition of Exemption under § 501(a). f.Application for Extension of Time. -Form 990

Public charities receive more favorable tax treatment than do exempt organizations which are classified as private foundations.

Which of the following statements related to unrelated debt-financed income are not correct?

The excise tax imposed on a private foundation's investment income can be imposed both as an initial (first-level)tax and an additional (second-level)tax.

Qualified state tuition programs are exempt from Federal income tax under § 501(c)(3).

What characteristics must be present for an exempt organization to be subject to the unrelated business income tax (UBIT)?

Which of the following statements regarding intermediate sanctions is correct?

Which of the following is not an excise tax that may be imposed on a private foundation?

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

For each of the following taxes which are imposed on private foundations, match the appropriate initial tax or additional tax. a.5% initial tax and 25% additional tax on private foundation. b.15% initial tax and 100% additional tax on private foundation. c.100% additional tax on private foundation and 50% additional tax on foundation manager. d.5% initial tax and 200% additional tax on private foundation. e.5% initial tax and 200% additional tax on the disqualified person. -Tax on taxable expenditures

An activity is not an unrelated trade or business for purposes of the unrelated business income tax (UBIT)unless it is profitable.

A feeder organization is subject to Federal income tax using the highest corporate tax rate (35%).

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

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. e.Application for Recognition of Exemption under § 501(a). f.Application for Extension of Time. -Form 4720

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:

Which of the following statements are correct?