Exam 15: Exempt Entities

Federal agencies exempt from Federal income tax under § 501(c)(1)are not subject to the unrelated business income tax (UBIT).

Which of the following exempt organizations are required to file Form 990 (Return of Organization Exempt from Income Tax)?

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.

Which of the following is not an example of an exempt organization?

Which of the following are qualified corporate sponsorship payments?

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

Agnes is aware that a feeder organization is subject to Federal income taxation.She wonders whether an organization otherwise taxable as a feeder organization can avoid such status if it remits less than 80% of its profits to the § 501(c)(3)entity.

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

While the major objective of the Federal income tax law is to raise revenue,social considerations and economic objectives also affect the tax law.

Midnight Basketball,Inc. ,an exempt organization that organizes and conducts basketball games for youths ages 10-13,receives a $50,000 contribution from Brown Shoe Company.Midnight agrees to put Brown's logo on the cover of its monthly newsletter.

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.

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

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

Which of the following are organizations exempt under § 501(c)(3)?

The excise tax imposed on a private foundation's excess business holdings is in effect an audit fee to defray IRS expenses.

For purposes of the unrelated business income tax,debt-financed property is all property of the exempt organization that is held to produce income and on which there is acquisition indebtedness.

Hope,Inc. ,an exempt organization,owns a factory building that it leases to a taxable corporation for $160,000 per year.Related expenses for Hope are $40,000.Hope's average acquisition indebtedness on the building is $600,000 and the average adjusted basis is $800,000.Calculate Hope's unrelated debt-financed income and expenses.Then indicate the effect of these items on unrelated business taxable income.

Which of the following excise taxes are imposed on the private foundation because it engages in prohibited transactions?

A corporate payment to an exempt organization that qualifies as a qualified sponsorship payment is not subject to the unrelated business income tax (UBIT).

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.