Question 1

Spirit, Inc., a § 501(c)(3) organization, is classified as a private foundation. It has investment income of $175,000. Calculate Spirit's tax on its investment income.

Accepted Answer

Investment income $1

Question 2

Loyal, Inc., is a §501(c)(3) organization that is not classified as a private foundation. During the current year, it is subject to intermediate sanctions. What other options does the IRS have in dealing with an exempt organization engaging in prohibited transactions?

Accepted Answer

The IRS has two other options available

Question 3

The excise tax imposed on a private foundation's investment income can be imposed as an initial (first­level) tax but cannot be imposed as an additional (second-level) tax.

Accepted Answer

A) True 
 B)False

Question 4

Describe how an exempt organization can be eligible to make lobbying expenditures without losing its tax exemption.

Accepted Answer

Certain exempt organizations are permitt

Question 5

Define a qualified corporate sponsorship payment.

Accepted Answer

A payment qualifies as a qualified spons

Question 6

Match the following statements.
a. Exempt from tax on unrelated business.
b. Inappropriate definition.
c. Exempt organization may be subject to the tax on unrelated business income.
d. Annual information return of an exempt organization which is not a private foundation.
e. Appropriate definition.
f. Annual information return of a private foundation.
-The trade or business is not substantially related to the exempt purpose of the organization.

Accepted Answer

The answer of Match the following statements.
a. Exempt from tax...

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements regarding exempt organization filing requirements is incorrect?

Accepted Answer

A)  Churches are required to file Form 990 (Return of Organization Exempt from Income Tax) only if its annual gross receipts exceed $50,000. 
B)  The due date for Form 990 (Return of Organization Exempt from Income Tax) is the fifteenth day of the fifth month after the end of the taxable year, whereas for private foundations the due date for Form 990-PF (Return of Private Foundation) is the fifteenth day of the fourth month after the end of the tax year. 
C)  Exempt organizations whose annual gross receipts do not exceed $50,000 can file an e-Postcard. 
D)  Only a. and b. are incorrect. 
E)  a., b., and c. are incorrect. 
A)  Churches are required to file Form 990 (Return of Organization Exempt from Income Tax) only if its annual gross receipts exceed $50,000. 
B)  The due date for Form 990 (Return of Organization Exempt from Income Tax) is the fifteenth day of the fifth month after the end of the taxable year, whereas for private foundations the due date for Form 990-PF (Return of Private Foundation) is the fifteenth day of the fourth month after the end of the tax year. 
C)  Exempt organizations whose annual gross receipts do not exceed $50,000 can file an e-Postcard. 
D)  Only a. and b. are incorrect. 
E)  a., b., and c. are incorrect.

Question 9

The income from a bingo game or a casino game conducted by an exempt organization may be unrelated business income.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Help, Inc., a tax-exempt organization, incurs lobbying expenses of $275,000 during the tax year. Help is eligible for and makes the § 501(h) lobbying expenditure election. During the year, Help spends $1,200,000 carrying out its exempt mission.
a. Will the lobbying expense result in Help losing its exempt status?
b. Calculate the amount of any tax that Help must pay associated with its lobbying expenses.

Accepted Answer

a. No. Help is not in danger of losing i

Question 12

To maintain exempt status, an organization must do which of the following:

Accepted Answer

A)  Satisfy only an organizational test. 
B)  Satisfy only an operational test. 
C)  Satisfy both an organizational test and an operational test. 
D)  Satisfy a financial test. 
E)  Once exempt status is granted, it will continue regardless of whether the organizational test and the operational test are satisfied. 
A)  Satisfy only an organizational test. 
B)  Satisfy only an operational test. 
C)  Satisfy both an organizational test and an operational test. 
D)  Satisfy a financial test. 
E)  Once exempt status is granted, it will continue regardless of whether the organizational test and the operational test are satisfied.

Question 13

For each of the following taxes which are imposed on private foundations, match the appropriate initial tax or additional tax.

-Tax on taxable expenditures

Accepted Answer

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. 
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.

Question 14

The League of Women Voters is a § 501(c)(3) organization.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

Trade or business, for purposes of the U

Question 16

Arbor, Inc., an exempt organization, leases land, building, and machinery to a tenant for a 5-year period. The rent income for the land and building is $400,000 per year and that from the related machinery is $80,000 per year. Expenses incurred by Arbor for the land and building during the year are $60,000 and those for the machinery are $36,000. Net unrelated business income, which includes the above rental income and expenses, is $800,000. Calculate Arbor's unrelated business taxable income.

Accepted Answer

Net unrelated business income $800,000
N

Question 17

Well, Inc., a private foundation, makes a speculative investment of $400,000 that puts the foundation assets at risk. Calculate the tax on jeopardizing investments. Assume that corrective action is taken so that the additional tax does not apply.

Accepted Answer

The initial tax on the private

Question 18

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 19

Under what part of § 501(c) are most organizations exempt from Federal income taxation?

Accepted Answer

Most organizations that are exempt from

Question 20

Match the following tax forms.

-Form 990-PF

Accepted Answer

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. 
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.

Spirit, Inc., a § 501(c)(3) organization, is classified as a private foundation. It has investment income of $175,000. Calculate Spirit's tax on its investment income.

Loyal, Inc., is a §501(c)(3) organization that is not classified as a private foundation. During the current year, it is subject to intermediate sanctions. What other options does the IRS have in dealing with an exempt organization engaging in prohibited transactions?

The excise tax imposed on a private foundation's investment income can be imposed as an initial (firstlevel) tax but cannot be imposed as an additional (second-level) tax.

Describe how an exempt organization can be eligible to make lobbying expenditures without losing its tax exemption.

Define a qualified corporate sponsorship payment.

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

Which of the following statements regarding exempt organization filing requirements is incorrect?

The income from a bingo game or a casino game conducted by an exempt organization may be unrelated business income.

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

To maintain exempt status, an organization must do which of the following:

For each of the following taxes which are imposed on private foundations, match the appropriate initial tax or additional tax. -Tax on taxable expenditures

The League of Women Voters is a § 501(c)(3) organization.

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

Well, Inc., a private foundation, makes a speculative investment of $400,000 that puts the foundation assets at risk. Calculate the tax on jeopardizing investments. Assume that corrective action is taken so that the additional tax does not apply.

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?

Under what part of § 501(c) are most organizations exempt from Federal income taxation?

Match the following tax forms. -Form 990-PF

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S: Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 15: Exempt Entities

Spirit, Inc., a § 501(c)(3) organization, is classified as a private foundation. It has investment income of $175,000. Calculate Spirit's tax on its investment income.

Loyal, Inc., is a §501(c)(3) organization that is not classified as a private foundation. During the current year, it is subject to intermediate sanctions. What other options does the IRS have in dealing with an exempt organization engaging in prohibited transactions?

The excise tax imposed on a private foundation's investment income can be imposed as an initial (first­level) tax but cannot be imposed as an additional (second-level) tax.

Describe how an exempt organization can be eligible to make lobbying expenditures without losing its tax exemption.

Define a qualified corporate sponsorship payment.

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

Which of the following statements regarding exempt organization filing requirements is incorrect?

The income from a bingo game or a casino game conducted by an exempt organization may be unrelated business income.

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

To maintain exempt status, an organization must do which of the following:

For each of the following taxes which are imposed on private foundations, match the appropriate initial tax or additional tax. -Tax on taxable expenditures

The League of Women Voters is a § 501(c)(3) organization.

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

Well, Inc., a private foundation, makes a speculative investment of $400,000 that puts the foundation assets at risk. Calculate the tax on jeopardizing investments. Assume that corrective action is taken so that the additional tax does not apply.

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?

Under what part of § 501(c) are most organizations exempt from Federal income taxation?

Match the following tax forms. -Form 990-PF

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S: Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

The excise tax imposed on a private foundation's investment income can be imposed as an initial (firstlevel) tax but cannot be imposed as an additional (second-level) tax.