Question 1

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

Accepted Answer

A) Religious, charitable, or educational organization. 
B) Voluntary employees' beneficiary association. 
C) Labor, agricultural, or horticultural organization. 
D) Stock exchange. 
E) All of the above can be exempt from tax. 
A) Religious, charitable, or educational organization. 
B) Voluntary employees' beneficiary association. 
C) Labor, agricultural, or horticultural organization. 
D) Stock exchange. 
E) All of the above can be exempt from tax.

Question 2

Unrelated debt-financed income,net of the unrelated debt-financed deductions,is subject to the unrelated business income tax only if the exempt organization is a private foundation.

Accepted Answer

A) True 
 B)False

Question 3

Which requirements must be satisfied for an exempt organization to be classified as an unrelated trade or business? Is being classified as an unrelated trade or business good or bad?

Accepted Answer

If the following requirements are satisf

Question 4

Maroon,Inc.,a tax-exempt organization,leases a building and equipment to Brown Partnership.The rental income from the building is $100,000 and from the equipment is $9,000.Rental expenses are $40,000 for the building and $4,000 for the equipment.What adjustment must be made to net unrelated business income?

Accepted Answer

A) $0 
B) ($60,000) 
C) ($65,000) 
D) ($109,000) 
A) $0 
B) ($60,000) 
C) ($65,000) 
D) ($109,000)

Question 5

For an exempt organization to be subject to the unrelated business income tax,the trade or business must not be substantially related to the exempt purpose of the organization.

Accepted Answer

A) True 
 B)False

Question 6

A feeder organization is an exempt organization that provides funding for nutritional programs for children.

Accepted Answer

A) True 
 B)False

Question 7

Match the following statements.
a.Exempt from tax on unrelated business.
b.Inappropriate definition.
c.Exempt organization may be subject to the tax on unrelated business income.
d.Annual information return of an exempt organization that is required to file a return and which is not a private foundation.
e.Appropriate definition.
f.Annual information return of a private foundation.
-Debt-financed income is the net income from investment assets.

Accepted Answer

The answer of Match the following statements.
a.Exempt from tax on...

Question 8

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.
​
Miracle is eligible for and thus makes the § 501(h) election.It calculates the lobbying nontaxable amount to be $100,000 ($500,000 exempt purpose expenditures × 20%).The total lobbying expenditures for the year were $115,000.Calculate Miracle's tax on excess lobbying expenditures.

Accepted Answer

Since Miracle's lobbying expenses of $11

Question 9

Medical,Inc.,a § 501(c)(3) exempt organization,engages in an excess benefit transaction,such that the intermediate sanctions rules may apply.The amount of the excess benefit is $50,000.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.

Accepted Answer

Under the intermediate sanctions provisi

Question 10

Identify the components of the tax model for unrelated business taxable income.

Accepted Answer

​
The tax model for unrelated business t

Question 11

Restful,Inc.,a § 501(c)(3) exempt organization,hires a registered lobbyist to promote its position on pending legislation.For the year,its lobbying expenses are $100,000.Restful makes the § 501(h) election.The lobbying nontaxable amount is $90,000.
a.Will the lobbying expenses result in Restful losing its exempt status?
b.Calculate the amount of any tax that Restful must pay associated with the lobbying expenses.

Accepted Answer

The answer of Restful,Inc.,a § 501(c)(3) exempt organization,hires a registered...

Question 12

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

Accepted Answer

A) Federal agencies. 
B) Churches. 
C) Exempt organizations whose annual gross receipts do not exceed $50,000. 
D) Private foundations. 
E) None of these entities must file Form 990. 
A) Federal agencies. 
B) Churches. 
C) Exempt organizations whose annual gross receipts do not exceed $50,000. 
D) Private foundations. 
E) None of these entities must file Form 990.

Question 13

Arbor,Inc.,an exempt organization,leases land,building,and machinery to a tenant for a 5-year period.The rent income for the land and building is $400,000 per year and that from the related machinery is $80,000 per year.Expenses incurred by Arbor for the land and building during the year are $60,000,and those for the machinery are $36,000.Net unrelated business income,which includes the above rental income and expenses,is $800,000.Calculate Arbor's unrelated business taxable income.

Accepted Answer

​
​
 @#IMG-DLM& The net rent income from the land

Question 14

Debt-financed property consists of all real property of a tax-exempt organization on which there is a mortgage.

Accepted Answer

A) True 
 B)False

Question 15

To satisfy the "not for profit" requirement for exempt status,the entity may not be engaged in a trade or business.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

The excise taxes imposed on private foun

Question 17

To be classified as a private foundation,the exempt status of an organization can be provided under either § 501(c)(1) or § 501(c)(3).

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

Exempt organizations that are not privat

Question 19

For purposes of the unrelated business income tax (UBIT),land that is acquired by the exempt organization for later exempt-use is excluded from the definition of debt-financed property if certain requirements are satisfied.Which of the following is not a requirement?

Accepted Answer

A) The principal purpose of acquiring the land is for use (substantially all) in achieving the organization's exempt purpose. 
B) The fair market value of the land is not over 50% of the fair market value of land presently owned by the exempt organization. 
C) The use of the land by the exempt organization will begin within ten years of the acquisition date. 
D) At the date the land is acquired, it is located in the neighborhood of other property of the organization for which substantially all the use is for achieving the organization's exempt purpose. 
A) The principal purpose of acquiring the land is for use (substantially all) in achieving the organization's exempt purpose. 
B) The fair market value of the land is not over 50% of the fair market value of land presently owned by the exempt organization. 
C) The use of the land by the exempt organization will begin within ten years of the acquisition date. 
D) At the date the land is acquired, it is located in the neighborhood of other property of the organization for which substantially all the use is for achieving the organization's exempt purpose.

Question 20

To what types of organizations does the UBIT apply?

Accepted Answer

The UBIT applies to all organi

Exam 23: Exempt Entities

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

Unrelated debt-financed income,net of the unrelated debt-financed deductions,is subject to the unrelated business income tax only if the exempt organization is a private foundation.

Which requirements must be satisfied for an exempt organization to be classified as an unrelated trade or business? Is being classified as an unrelated trade or business good or bad?

For an exempt organization to be subject to the unrelated business income tax,the trade or business must not be substantially related to the exempt purpose of the organization.

A feeder organization is an exempt organization that provides funding for nutritional programs for children.

Identify the components of the tax model for unrelated business taxable income.

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

Debt-financed property consists of all real property of a tax-exempt organization on which there is a mortgage.

To satisfy the "not for profit" requirement for exempt status,the entity may not be engaged in a trade or business.

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

To be classified as a private foundation,the exempt status of an organization can be provided under either § 501(c)(1) or § 501(c)(3).

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

For purposes of the unrelated business income tax (UBIT),land that is acquired by the exempt organization for later exempt-use is excluded from the definition of debt-financed property if certain requirements are satisfied.Which of the following is not a requirement?

To what types of organizations does the UBIT apply?

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

Property Transactions, capital Gains and Losses, sec1231, and 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 Reorganization

Partnerships

S Corporations

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

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