Exam 15: Exempt Entities

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%).

City, Inc., an exempt organization, has included among other amounts the following in calculating net unrelated business income of $500,000. The only expenses incurred associated with these items are rental expenses (which includes depreciation of $10,000) of $15,000. Calculate City, Inc.'s UBTI.

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

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

Acquisition indebtedness consists of the unpaid amounts of which of the following for debt-financed property?

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

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

The excise tax that is imposed on private foundations for making jeopardizing investments is imposed because the foundation has made speculative investments that put the foundation's income at risk.

Debt-financed income is the net income from debt financed property.

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

Give an example of the indicated types of exempt organizations. -§ 501(c)(6) business league

The excise tax imposed on private foundations for excess business holdings is imposed on investments that enable the private foundation to control publicly-held rather than privately-held businesses.

Tax on jeopardizing investments

Third Church operates a gift shop in its parish house. The total income of the church is $800,000. Of this amount, $300,000 comes from offerings and $500,000 comes from the net income of the gift shop. The gift shop operations are conducted by six full-time, paid employees. Which of the following statements is correct?

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

To satisfy the "not for profit" requirement for exempt status, the entity may not be engaged in a trade or business.

Give an example of the indicated types of exempt organizations. -Not an exempt organization

What tax forms are used to apply for exempt status?

A feeder organization is exempt from Federal income taxation because it carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt entity.

Discuss benefits for which an exempt organization may be eligible, other than exemption from Federal income tax.