Exam 15: Exempt Entities

Which of the following statements is correct?

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)].

Which of the following statements regarding low-cost articles is correct?

An exempt organization can avoid classification as a private foundation if it is broadly publicly supported.To be broadly publicly supported,which of the following is required?

Help,Inc. ,a tax-exempt organization,incurs lobbying expenses of $275,000 during the tax year.Help is eligible for and makes the § 501(h)lobbying expenditure election.During the year,Help spends $1,200,000 carrying out its exempt mission.

A private foundation is subject to which of the following taxes?

Define a qualified corporate sponsorship payment.

All exempt organizations which are subject to the unrelated business income tax must file Form 990-T (Exempt Organization Business Income Tax Return).

Why are some organizations exempt from Federal income tax?

Support the Pets,Inc. ,a § 501(c)(3)organization,provides pet food to humane societies.All of the pet food is received as contributions from individuals or from a wholly-owned,for-profit subsidiary (Sales,Inc. ),which is in the retail pet food business (i.e. ,pet food that has been in inventory for over 120 days is transferred to Support the Pets for distributions to humane societies).In addition to the pet food,Sales distributes 75% of its net income each year to Support the Pets.

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.

The excise taxes such as the tax on self-dealing and the tax on excess business holdings are imposed on exempt organizations classified as private foundations and are not imposed on exempt organizations classified as public charities.

A trade or business that is operated by an exempt organization which otherwise would be subject to the tax on unrelated business income is exempt from tax,if the profits generated by the trade or business are used by the exempt organization for exempt purposes.

Warmth,Inc. ,a private foundation,makes an expenditure of $800,000 that should not be made by a private foundation.Calculate the tax on taxable expenditures.Assume that corrective action is taken so that the additional tax does not apply.

Which of the following are exempt organizations?

If an exempt organization conducts a trade or business that is regularly carried on by the organization,it is subject to the unrelated business income tax (UBIT).

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

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.

The general objective of the tax on unrelated business income is to tax such income as if the entity were a taxable corporation.

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.