Question 1

An activity is not an unrelated trade or business for purposes of the unrelated business income tax (UBIT)unless it is profitable.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Which of the following are available options for the IRS in dealing with an exempt organization entering into prohibited transactions?

Accepted Answer

A) Attempt to subject all or part of the organization's income to Federal income tax. 
B) Revoke the exempt status of the organization. 
C) Impose intermediate sanctions in the form of threatened loss of exempt status. 
D) Only a.and b. 
E) a. ,b. ,and c. 
A) Attempt to subject all or part of the organization's income to Federal income tax. 
B) Revoke the exempt status of the organization. 
C) Impose intermediate sanctions in the form of threatened loss of exempt status. 
D) Only a.and b. 
E) a. ,b. ,and c.

Question 4

Give an example of the indicated types of exempt organizations.

Accepted Answer

The answer of Give an example of the indicated types...

Question 5

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

Accepted Answer

A bingo game is not an unrelat

Question 6

An eligible § 501(c)(3)organization has made the § 501(h)election to participate in lobbying on a limited basis.If the ceiling on lobbying established in § 501(h)(lobbying nontaxable amount)is exceeded,what are the potential tax consequences to the exempt organization?

Accepted Answer

First,a tax is levied on the e

Question 7

If an exempt organization owns a feeder organization,the exempt organization is taxed on the profits of the feeder organization under the unrelated business income tax (UBIT)rules.

Accepted Answer

A) True 
 B)False

Question 8

Fourth Church operates a gift shop in its parish house.The total income of the church is $900,000.Of this amount,$400,000 comes from offerings and $500,000 comes from the net income of the gift shop.The gift shop operations are conducted by one full-time employee (the manager)and 50 volunteers.None of the volunteers works more than 15 hours per week.Which of the following statements is correct?

Accepted Answer

A) The $900,000 is unrelated business income. 
B) The $500,000 of gift shop net income is unrelated business income. 
C) The $400,000 is unrelated business income because the gift shop is a feeder organization. 
D) None of the $900,000 is unrelated business income. 
E) The unrelated business income tax does not apply to churches. 
A) The $900,000 is unrelated business income. 
B) The $500,000 of gift shop net income is unrelated business income. 
C) The $400,000 is unrelated business income because the gift shop is a feeder organization. 
D) None of the $900,000 is unrelated business income. 
E) The unrelated business income tax does not apply to churches.

Question 9

For an activity to be considered as regularly carried on for purposes of the unrelated business income tax,the activity must be conducted during the work week (i.e. ,activities performed on the weekend are not considered in determining if the activity is regularly carried on).

Accepted Answer

A) True 
 B)False

Question 10

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?

Accepted Answer

A) An excise tax in the form of an initial tax at the rate of 5% may be imposed on Teal. 
B) An excise tax in the form of an initial tax at the rate of 2.5% may be imposed on the foundation manager. 
C) An excise tax in the form of an additional tax at the rate of 100% may be imposed on Teal. 
D) An excise tax in the form of an additional tax at the rate of 50% may be imposed on the foundation manager. 
E) None of the statements is correct. 
A) An excise tax in the form of an initial tax at the rate of 5% may be imposed on Teal. 
B) An excise tax in the form of an initial tax at the rate of 2.5% may be imposed on the foundation manager. 
C) An excise tax in the form of an additional tax at the rate of 100% may be imposed on Teal. 
D) An excise tax in the form of an additional tax at the rate of 50% may be imposed on the foundation manager. 
E) None of the statements is correct.

Question 11

Relevant factors in the unrelated business income tax (UBIT)rules for determining whether a trade or business is regularly carried on by an exempt organization do not include which of the following?

Accepted Answer

A) The proportion of the total revenue of the exempt organization raised by the activity. 
B) The frequency of the activity. 
C) The continuity of the activity. 
D) The manner in which the activity is pursued. 
E) All of the above are relevant factors. 
A) The proportion of the total revenue of the exempt organization raised by the activity. 
B) The frequency of the activity. 
C) The continuity of the activity. 
D) The manner in which the activity is pursued. 
E) All of the above are relevant factors.

Question 12

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 13

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%).

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) Not necessary to file a Federal income tax return. 
B) Generally exempt from Federal income tax. 
C) Contributions to the exempt organization are deductible by the donor. 
D) Only b.and c. 
E) a. ,b. ,and c. 
A) Not necessary to file a Federal income tax return. 
B) Generally exempt from Federal income tax. 
C) Contributions to the exempt organization are deductible by the donor. 
D) Only b.and c. 
E) a. ,b. ,and c.

Question 15

Plus,Inc. ,is a § 501(c)(3)organization.It generates a small amount of net income each year.Ralph,the CEO of Plus,Inc. ,is concerned that Plus may be subject to the unrelated business income tax.Is there a materiality exception to this tax?

Accepted Answer

Yes.The materiality exception

Question 16

Define average acquisition indebtedness with respect to debt-financed property.

Accepted Answer

Average acquisition indebtedness is the

Question 17

If an organization qualifies for exempt status for Federal income tax purposes,it is exempt from all Federal income taxes.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

All organizations that are exempt from Federal income tax are exempt under § 501(c)(3).

Accepted Answer

A) True 
 B)False

Question 20

Define a private foundation.

Accepted Answer

The following § 501(

An activity is not an unrelated trade or business for purposes of the unrelated business income tax (UBIT)unless it is profitable.

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

Which of the following are available options for the IRS in dealing with an exempt organization entering into prohibited transactions?

Give an example of the indicated types of exempt organizations.

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

An eligible § 501(c)(3)organization has made the § 501(h)election to participate in lobbying on a limited basis.If the ceiling on lobbying established in § 501(h)(lobbying nontaxable amount)is exceeded,what are the potential tax consequences to the exempt organization?

If an exempt organization owns a feeder organization,the exempt organization is taxed on the profits of the feeder organization under the unrelated business income tax (UBIT)rules.

For an activity to be considered as regularly carried on for purposes of the unrelated business income tax,the activity must be conducted during the work week (i.e. ,activities performed on the weekend are not considered in determining if the activity is regularly carried on).

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?

Relevant factors in the unrelated business income tax (UBIT)rules for determining whether a trade or business is regularly carried on by an exempt organization do not include which of the following?

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

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%).

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

Plus,Inc. ,is a § 501(c)(3)organization.It generates a small amount of net income each year.Ralph,the CEO of Plus,Inc. ,is concerned that Plus may be subject to the unrelated business income tax.Is there a materiality exception to this tax?

Define average acquisition indebtedness with respect to debt-financed property.

If an organization qualifies for exempt status for Federal income tax purposes,it is exempt from all Federal income taxes.

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

All organizations that are exempt from Federal income tax are exempt under § 501(c)(3).

Define a private foundation.

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

An activity is not an unrelated trade or business for purposes of the unrelated business income tax (UBIT)unless it is profitable.

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

Which of the following are available options for the IRS in dealing with an exempt organization entering into prohibited transactions?

Give an example of the indicated types of exempt organizations.

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

An eligible § 501(c)(3)organization has made the § 501(h)election to participate in lobbying on a limited basis.If the ceiling on lobbying established in § 501(h)(lobbying nontaxable amount)is exceeded,what are the potential tax consequences to the exempt organization?

If an exempt organization owns a feeder organization,the exempt organization is taxed on the profits of the feeder organization under the unrelated business income tax (UBIT)rules.

For an activity to be considered as regularly carried on for purposes of the unrelated business income tax,the activity must be conducted during the work week (i.e. ,activities performed on the weekend are not considered in determining if the activity is regularly carried on).

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?

Relevant factors in the unrelated business income tax (UBIT)rules for determining whether a trade or business is regularly carried on by an exempt organization do not include which of the following?

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

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%).

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

Plus,Inc. ,is a § 501(c)(3)organization.It generates a small amount of net income each year.Ralph,the CEO of Plus,Inc. ,is concerned that Plus may be subject to the unrelated business income tax.Is there a materiality exception to this tax?

Define average acquisition indebtedness with respect to debt-financed property.

If an organization qualifies for exempt status for Federal income tax purposes,it is exempt from all Federal income taxes.

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

All organizations that are exempt from Federal income tax are exempt under § 501(c)(3).

Define a private foundation.

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