Question 1

Which of the following statements regarding low-cost articles is correct?

Accepted Answer

A) The distribution of low-cost articles can be classified as not being an unrelated trade or business. 
B) For 2012, a low-cost article is one that costs $9.70 or less. 
C) Any contributions received as the result of the distribution of low-cost articles must be included in unrelated business income. 
D) Only a.and b.are correct. 
E) a., b., and c.are correct. 
A) The distribution of low-cost articles can be classified as not being an unrelated trade or business. 
B) For 2012, a low-cost article is one that costs $9.70 or less. 
C) Any contributions received as the result of the distribution of low-cost articles must be included in unrelated business income. 
D) Only a.and b.are correct. 
E) a., b., and c.are correct.

Question 2

Fourth Church operates a gift shop in its parish house.The total income of the church is $900,000.Of this amount, $400,000 comes from offerings and $500,000 comes from the net income of the gift shop.The gift shop operations are conducted by one full-time employee (the manager) and 50 volunteers.None of the volunteers works more than 15 hours per week.Which of the following statements is correct?

Accepted Answer

A) The $900,000 is unrelated business income. 
B) The $500,000 of gift shop net income is unrelated business income. 
C) The $400,000 is unrelated business income because the gift shop is a feeder organization. 
D) None of the $900,000 is unrelated business income. 
E) The unrelated business income tax does not apply to churches. 
A) The $900,000 is unrelated business income. 
B) The $500,000 of gift shop net income is unrelated business income. 
C) The $400,000 is unrelated business income because the gift shop is a feeder organization. 
D) None of the $900,000 is unrelated business income. 
E) The unrelated business income tax does not apply to churches.

Question 3

Which of the following statements are correct with respect to the unrelated business income tax?

Accepted Answer

A) Under certain circumstances, a corporate sponsorship payment can be classified as not being an unrelated trade or business. 
B) Under certain circumstances, a casino game can be classified as not being an unrelated trade or business. 
C) Under certain circumstances, the exchanging or renting of membership lists to other exempt organizations can be classified as not being an unrelated trade or business. 
D) Only a.and c.are correct. 
E) a., b., and c.all are correct. 
A) Under certain circumstances, a corporate sponsorship payment can be classified as not being an unrelated trade or business. 
B) Under certain circumstances, a casino game can be classified as not being an unrelated trade or business. 
C) Under certain circumstances, the exchanging or renting of membership lists to other exempt organizations can be classified as not being an unrelated trade or business. 
D) Only a.and c.are correct. 
E) a., b., and c.all are correct.

Question 4

Midge is the chairman of the board for a § 501(c)(3) exempt organization.She would like the exempt organization to be able to avoid private foundation classification status.Describe how this can be achieved.

Accepted Answer

An exempt organization that otherwise wo

Question 5

Which of the following are exempt organizations to which contributions made are eligible for the charitable contribution deduction?

Accepted Answer

A) National Basketball Association (NB
A) . 
B) Red Cross. 
C) American Institute of CPAs (AICP
A) . 
D) Only b.and c. 
E) a., b., and c. 
A) National Basketball Association (NB
A) . 
B) Red Cross. 
C) American Institute of CPAs (AICP
A) . 
D) Only b.and c. 
E) a., b., and c.

Question 6

If an exempt organization distributes "low-cost items" as an incidental part of its solicitation for charitable contributions, the distribution is not considered an unrelated trade or business.

Accepted Answer

The answer of If an exempt organization distributes "low-cost items"...

Question 7

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

Accepted Answer

Many organizations t

Question 8

Why are some organizations exempt from Federal income tax?

Accepted Answer

The Code's treatment of exempt organizat

Question 9

Wett, Inc., a § 501(c)(3) exempt organization, acquired all the stock of a for-profit corporation for $150,000.Wett is a private foundation.The acquired corporation was not a related business.Calculate the tax on excess business holdings.Assume that corrective action is taken so that the additional tax does not apply.

Accepted Answer

The initial tax on the private

Question 10

Which of the following is one of the requirements that will enable mortgaged land acquired by an exempt organization for later exempt use to be excluded from debt-financed property, for purposes of the unrelated business income tax?

Accepted Answer

A) The principal purpose of acquiring the land is for investment. 
B) The land is used within ten years of the acquisition date in the organization's exempt purpose. 
C) The land is located in the United States. 
D) Only a.and b. 
E) None of the above. 
A) The principal purpose of acquiring the land is for investment. 
B) The land is used within ten years of the acquisition date in the organization's exempt purpose. 
C) The land is located in the United States. 
D) Only a.and b. 
E) None of the above.

Question 11

A church is one of the types of exempt organizations.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following excise taxes are imposed on the private foundation because it engages in prohibited transactions?

Accepted Answer

A) Tax on investment income. 
B) Tax on self-dealing. 
C) Tax on failure to distribute income. 
D) Only b.and c. 
E) a., b., and c. 
A) Tax on investment income. 
B) Tax on self-dealing. 
C) Tax on failure to distribute income. 
D) Only b.and c. 
E) a., b., and c.

Question 13

An exempt organization that is eligible to elect under § 501(h) to engage in lobbying activities on a limited basis incurs no tax liability from lobbying, if the lobbying expenditures for the tax year do not exceed the lobbying expenditures ceiling.

Accepted Answer

A) True 
 B)False

Question 14

Robin, Inc., an exempt organization, acquired a building for $500,000 which it will lease to XYZ, Inc., for $35,000 annually.To finance the acquisition of the building, Robin secures a mortgage on it of $312,500.Advise Robin as to whether it has any unrelated debt-financed income or deductions.

Accepted Answer

The building is appropriately classified

Question 15

A trade or business that is operated by an exempt organization which otherwise would be subject to the tax on unrelated business income is exempt from tax, if the profits generated by the trade or business are used by the exempt organization for exempt purposes.

Accepted Answer

A) True 
 B)False

Question 16

The tax consequences to a donor of making a charitable contribution to an exempt organization classified as a private foundation may be less favorable than the tax consequences to a donor of making a charitable contribution to an exempt organization that is not classified as a private foundation.

Accepted Answer

A) True 
 B)False

Question 17

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 18

If an exempt organization is required to file an annual information return, on what form is it filed?

Accepted Answer

Exempt organizations that are not privat

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 23: Exempt Entities

Which of the following statements regarding low-cost articles is correct?

Which of the following statements are correct with respect to the unrelated business income tax?

Midge is the chairman of the board for a § 501(c)(3) exempt organization.She would like the exempt organization to be able to avoid private foundation classification status.Describe how this can be achieved.

Which of the following are exempt organizations to which contributions made are eligible for the charitable contribution deduction?

If an exempt organization distributes "low-cost items" as an incidental part of its solicitation for charitable contributions, the distribution is not considered an unrelated trade or business.

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

Why are some organizations exempt from Federal income tax?

Which of the following is one of the requirements that will enable mortgaged land acquired by an exempt organization for later exempt use to be excluded from debt-financed property, for purposes of the unrelated business income tax?

A church is one of the types of exempt organizations.

Which of the following excise taxes are imposed on the private foundation because it engages in prohibited transactions?

An exempt organization that is eligible to elect under § 501(h) to engage in lobbying activities on a limited basis incurs no tax liability from lobbying, if the lobbying expenditures for the tax year do not exceed the lobbying expenditures ceiling.

Robin, Inc., an exempt organization, acquired a building for $500,000 which it will lease to XYZ, Inc., for $35,000 annually.To finance the acquisition of the building, Robin secures a mortgage on it of $312,500.Advise Robin as to whether it has any unrelated debt-financed income or deductions.

A trade or business that is operated by an exempt organization which otherwise would be subject to the tax on unrelated business income is exempt from tax, if the profits generated by the trade or business are used by the exempt organization for exempt purposes.

The tax consequences to a donor of making a charitable contribution to an exempt organization classified as a private foundation may be less favorable than the tax consequences to a donor of making a charitable contribution to an exempt organization that is not classified as a private foundation.

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).

If an exempt organization is required to file an annual information return, on what form is it filed?

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

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

An Introduction to Taxation and Understanding the Federal 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

A: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, 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

Income Taxation of Trusts and Estates

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