Exam 15: Exempt Entities

The due date for both Form 990 (Return of Organization Exempt from Income Tax)and Form 990-PF (Return of Private Foundation)is the fifteenth day of the fourth month after the end of the taxable year.

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

Which of the following is a requirement for exempt status?

What are intermediate sanctions and to what types of exempt organizations do they apply?

To satisfy the broadly supported provision to avoid classification as a private foundation,the exempt organization must satisfy both an external support test and an internal support test.Under the internal support test,more than one-third of the exempt organization's support for the taxable year must come from gross investment income and unrelated business taxable income.

First Americans,Inc. ,a § 501(c)(3)organization,operates a museum which depicts the lives of a tribe of Native Americans.It charges an admission fee,but also finances its operations through endowment income,contributions,and gift shop sales.The gift shop is operated by 50 volunteers and the museum is operated by 15 employees.Revenue by source is:

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.

Exempt organizations which are appropriately classified as private foundations include churches,educational institutions,and charitable organizations receiving a major portion of their support from the general public or the U.S. ,a state,or a political subdivision thereof.

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

Francis is the CEO of Give,Inc. ,a § 501(c)(3)organization.Francis informs you that the will of a major donor transfers 100% of the stock of Friendly Hot Dogs to Give,Inc.Since Friendly is a profitable entity,Francis would like for Give to continue to own and operate Friendly Hot Dogs.You inform Francis that Friendly would be a feeder organization.Describe for the CEO what a feeder organization is and how it is taxed.

Which of the following statements regarding intermediate sanctions is correct?

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

An exempt entity in no circumstance is subject to Federal income tax.

Which of the following activities,whose proceeds benefit an exempt organization,are subject to the feeder organization rules?

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:

An entity satisfies the "not-for-profit" requirement for exempt status if its total expenses for the year exceed its gross income.

If the unrelated business income of an exempt organization is $20,000 or less,the unrelated business income tax (UBIT)will be $0.

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.

Which of the following statements are correct?

Amber,Inc. ,an exempt organization,reports unrelated business taxable income of $300,000.Total charitable contributions are $35,000,of which $31,000 (associated with the unrelated trade or business)has been deducted in calculating net unrelated business income.Calculate Amber's positive and negative adjustments in calculating unrelated business taxable income.