Question 1

What is the purpose of the "broadly supported" exception for an exempt organization being classified as a private foundation?

Accepted Answer

The intent of the external support test

Question 2

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

Accepted Answer

A) Posting the required tax forms on the Internet is an acceptable technique for satisfying the "widely available requirement." 
B) Forms 990 and 1023 must be readily available to the general public. 
C) If an individual requests a copy of the required tax forms in writing, the exempt entity must provide a copy within 30 days. 
D) Only a.and b.are correct. 
E) a., b., and c.are all correct. 
A) Posting the required tax forms on the Internet is an acceptable technique for satisfying the "widely available requirement." 
B) Forms 990 and 1023 must be readily available to the general public. 
C) If an individual requests a copy of the required tax forms in writing, the exempt entity must provide a copy within 30 days. 
D) Only a.and b.are correct. 
E) a., b., and c.are all correct.

Question 3

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

Accepted Answer

A) Debt incurred in acquiring or improving the property. 
B) Debt incurred to enable the organization to carry out its exempt purpose. 
C) Debt incurred to enable the exempt organization to acquire a feeder organization. 
D) Only a.and b. 
E) a., b., and c. 
A) Debt incurred in acquiring or improving the property. 
B) Debt incurred to enable the organization to carry out its exempt purpose. 
C) Debt incurred to enable the exempt organization to acquire a feeder organization. 
D) Only a.and b. 
E) a., b., and c.

Question 4

Define a private foundation.

Accepted Answer

The following § 501(

Question 5

Which of the following statements is/are correct with respect to the unrelated business income tax (UBIT)?

Accepted Answer

A) The UBIT does not apply if the business is staffed by volunteers. 
B) The UBIT does not apply if all of the products sold by the business are donated. 
C) The UBIT does not apply if the gross profit margin is not greater than the highest corporate tax rate. 
D) Only a.and b.are correct. 
E) a., b., and c.are all correct. 
A) The UBIT does not apply if the business is staffed by volunteers. 
B) The UBIT does not apply if all of the products sold by the business are donated. 
C) The UBIT does not apply if the gross profit margin is not greater than the highest corporate tax rate. 
D) Only a.and b.are correct. 
E) a., b., and c.are all correct.

Question 6

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

Accepted Answer

Many organizations t

Question 7

Even though a church is exempt under § 501(c)(3), it is required to obtain IRS approval for its exempt status.

Accepted Answer

A) True 
 B)False

Question 8

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.

Accepted Answer

The building is not classified as debt-f

Question 9

Miracle, Inc., is a § 501(c)(3) organization involved in medical research.Based on its expectation that proposed legislation will adversely affect the funding supporting its mission, Miracle hires a lobbyist to work in Washington to represent its views.

Accepted Answer

Miracle is eligible for and thus makes t

Question 10

The activity of exchanging with or renting to other exempt organizations the exempt organization's donor or membership list is not an unrelated trade or business.

Accepted Answer

A) True 
 B)False

Question 11

One of the requirements for an exempt organization being classified as an unrelated trade or business is the "not substantially related" requirement.That is, the trade or business is not substantially related to the exempt purpose of the organization.How can an exempt organization avoid satisfying this requirement?

Accepted Answer

To avoid satisfying this requirement, th

Question 12

Radio, Inc., an exempt organization, trains disabled individuals to be radio announcers.Rather than hold a traditional graduation exercise, the graduates compete in a radio announcer contest.Such activities are held four times each year.An admission fee of $10 is charged to the general public to attend the contest.Eight hundred people attended the contest this year, and prizes of $2,000 were given to the top 3 graduates.Calculate the amount of Radio's unrelated business income from this activity.

Accepted Answer

The contest activity is not classified a

Question 13

Match the following statements with the correct description.

Accepted Answer

The answer of Match the following statements with the correct...

Question 14

What are the excise taxes imposed on private foundations, and why are they imposed?

Accepted Answer

The excise taxes imposed on private foun

Question 15

An exempt organization that otherwise would be classified as an unrelated trade or businesses will not be subject to the unrelated business income tax if the individuals performing substantially all the work of the trade or business do so without compensation.

Accepted Answer

A) True 
 B)False

Question 16

Revenue generated by an exempt organization from the distribution of low-cost items is not income from an unrelated trade or business.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Which of the following statements are correct?

Accepted Answer

A) If an exempt organization has annual gross receipts of less than $50,000, it files an e-Postcard (Form 990-N). 
B) Private foundations must file Form 990-PF (Return of Private Foundation). 
C) An exempt organization with less than $250,000 in gross receipts may file a Form 990-EZ. 
D) Only a.and b.are correct. 
E) a., b., and c.all are correct. 
A) If an exempt organization has annual gross receipts of less than $50,000, it files an e-Postcard (Form 990-N). 
B) Private foundations must file Form 990-PF (Return of Private Foundation). 
C) An exempt organization with less than $250,000 in gross receipts may file a Form 990-EZ. 
D) Only a.and b.are correct. 
E) a., b., and c.all are correct.

Question 19

Unless the "widely available" provision is satisfied, a § 501(c)(3) exempt organization (excluding churches and private foundations) must make copies of the following available to the general public: Form 990 (Return of Organization Exempt from Income Tax) and Form 1023 [Application for Recognition of Exemption under § 501(c)(3)] or Form 1024 [Application for Recognition of Exemption under § 501(a)].

Accepted Answer

A) True 
 B)False

Question 20

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.

Accepted Answer

A) True 
 B)False

Exam 23: Exempt Entities

What is the purpose of the "broadly supported" exception for an exempt organization being classified as a private foundation?

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

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

Define a private foundation.

Which of the following statements is/are correct with respect to the unrelated business income tax (UBIT)?

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

Even though a church is exempt under § 501(c)(3), it is required to obtain IRS approval for its exempt status.

Miracle, Inc., is a § 501(c)(3) organization involved in medical research.Based on its expectation that proposed legislation will adversely affect the funding supporting its mission, Miracle hires a lobbyist to work in Washington to represent its views.

The activity of exchanging with or renting to other exempt organizations the exempt organization's donor or membership list is not an unrelated trade or business.

Match the following statements with the correct description.

What are the excise taxes imposed on private foundations, and why are they imposed?

An exempt organization that otherwise would be classified as an unrelated trade or businesses will not be subject to the unrelated business income tax if the individuals performing substantially all the work of the trade or business do so without compensation.

Revenue generated by an exempt organization from the distribution of low-cost items is not income from an unrelated trade or business.

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?

Which of the following statements are correct?

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.

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

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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