Exam 23: Exempt Entities

Medical, Inc., a § 501(c)(3) exempt organization, engages in an excess benefit transaction.The amount of the excess benefit is $200,000.For the organization management, the participation in the excess benefit transaction was not willful and was due to reasonable cause.Calculate the amount of the excise tax (first-level tax) imposed under the intermediate sanctions provision.

If personal property is leased with real property and more than 45% of the rent income under the lease is from personal property, all of the rent income is subject to the unrelated business income tax.

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

Which of the following requirements must be satisfied for a bingo game to be classified as not being an unrelated trade or business?

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

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.

Rose, Inc., a qualifying § 501(c)(3) organization, incurs lobbying expenditures of $145,000 during the taxable year. Exempt purpose expenditures are $500,000. If Rose makes the election under § 501(h) to make lobbying expenditures on a limited basis, its tax liability resulting from the lobbying expenditures is:

George is running for mayor of Culpepper. The members of Third Church adamantly oppose his candidacy. They would like to run a political advertisement in the local newspaper opposing his candidacy. The newspaper ad would have no effect on Third Church's exempt status because the ad opposes George; it does not support his opponent.

Which of the following § 501(c)(3) exempt organizations is appropriately classified as a private foundation?

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?

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

Give an example of the indicated types of exempt organizations.

Match the following tax forms.

The Dispensary is a pharmacy that is part of a § 501(c)(3) hospital.Its primary mission is to dispense medicines for hospital patients.In addition, the pharmacy dispenses medicines to former hospital patients for a period of up to 30 days after discharge from the hospital.It does this for the dual purpose of convenience to the former patients (i.e., the closest pharmacy is 6 miles away), and to ensure that the former patients receive the medicines that have been prescribed for them. The Dispensary carefully carries out the policy of the hospital board that no more than 20% of its gross revenues come from former-patient medicine sales.If necessary, in December of each year, sales to former patients are curtailed to assure compliance with this policy.Sales revenue from each of the two sources is as follows for 2011. Calculate the amount of The Dispensary's unrelated business gross income.

Which of the following are consequences of tax-exempt status?

The key factors in determining whether an exempt entity's income from a bingo game is unrelated trade or business income are whether substantially all the work is performed by volunteers and all of the prizes to be awarded are received as donations.

Which of the following statements is incorrect?

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.

Even though a church is not required to obtain IRS approval of its exempt status, it still must file Form 990 (Return of Organization Exempt from Income Tax) annually.

Are some exempt organizations eligible to be recipients of contributions for which the donor does not qualify for a charitable contribution deduction?