Question 1

Discuss benefits for which an exempt organization may be eligible,other than exemption from Federal income tax.

Accepted Answer

In addition to being exempt fr

Question 2

If an exempt organization distributes "low-cost items" as an incidental part of its solicitation for charitable contributions,the distribution is not considered an unrelated trade or business.
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a.Under what dollar amount is a distribution no longer a "low-cost item"?
b.Provide examples of low-cost items.

Accepted Answer

The answer of If an exempt organization distributes "low-cost items"...

Question 3

Which of the following statements are correct?

Accepted Answer

A) If an exempt organization records annual gross receipts of less than $50,000,it files Form 990-N. 
B) Private foundations must file Form 990-PF (Return of Private Foundation). 
C) An exempt organization with less than $250,000 in gross receipts may file a Form 990-EZ. 
D) Only a.and b.are correct. 
E) a.,b.,and c.all are correct. 
A) If an exempt organization records annual gross receipts of less than $50,000,it files Form 990-N. 
B) Private foundations must file Form 990-PF (Return of Private Foundation). 
C) An exempt organization with less than $250,000 in gross receipts may file a Form 990-EZ. 
D) Only a.and b.are correct. 
E) a.,b.,and c.all are correct.

Question 4

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.

Accepted Answer

A) True 
 B)False

Question 5

Pearl Inc.,a tax-exempt organization,leases land,building,and machinery to Purple Partnership for a 5-year period.The rental income from the land and building is $100,000,with related expenses of $40,000.The rental income from the machinery is $9,000,with related expenses of $3,000.What adjustment must be made to net unrelated business income?

Accepted Answer

The net rental income of $66,000 ($60,00

Question 6

Ice,Inc.,a § 501(c)(3) organization,has been leasing a building to Soft,Inc.,a taxable entity,for 15 years.The lease terminates in the current tax year.Ice's adjusted basis for the building is $225,000.It sells the building to the Development Partnership,a taxable entity,for $440,000.Selling expenses are $26,400.Calculate the effect of the sale on Ice's UBTI.
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​

Accepted Answer

The answer of Ice,Inc.,a § 501(c)(3) organization,has been leasing a...

Question 7

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

Accepted Answer

A bingo game is not an unrelat

Question 8

A church is one of the types of exempt organizations.

Accepted Answer

A) True 
 B)False

Question 9

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.

Accepted Answer

A) True 
 B)False

Question 10

Blue,Inc.,receives its support from the following sources.
Which of the following statements is correct?

Accepted Answer

A) Blue, Inc., is a private foundation because it satisfies the external support test and fails the internal support test. 
B) Blue, Inc., is not a private foundation because it fails both the internal and external support tests. 
C) Blue, Inc., is a private foundation because it satisfies both the external support test and the internal support test. 
D) Blue, Inc., is not a private foundation because it satisfies both the external support test and the internal support test. 
A) Blue, Inc., is a private foundation because it satisfies the external support test and fails the internal support test. 
B) Blue, Inc., is not a private foundation because it fails both the internal and external support tests. 
C) Blue, Inc., is a private foundation because it satisfies both the external support test and the internal support test. 
D) Blue, Inc., is not a private foundation because it satisfies both the external support test and the internal support test.

Question 11

What is the purpose of the unrelated business income tax?

Accepted Answer

The unrelated business income tax is des

Question 12

The unrelated business income tax (UBIT) is calculated by multiplying unrelated business taxable income by the highest corporate tax rate.

Accepted Answer

A) True 
 B)False

Question 13

Match the following statements.
a.May be subject to some Federal income taxation and classification may adversely affect amount of charitable contributions received.
b.Tax imposed for engaging in transactions with disqualified persons.
c.Tax imposed for making investments that are too risky.
d.Tax imposed on investments that enable a private foundation to control unrelated for-profit businesses.
-Tax on self-dealing

Accepted Answer

The answer of Match the following statements.
a.May be subject to...

Question 14

The purpose of the excise tax imposed on a private foundation for failure to distribute sufficient levels of income is to motivate the foundation to distribute more of its income for application to exempt purposes.

Accepted Answer

A) True 
 B)False

Question 15

The trade or business of selling merchandise where substantially all of the merchandise has been received as contributions or gifts is not subject to the unrelated business income tax.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a requirement that will enable mortgaged land acquired by an exempt organization for later exempt use to be excluded from debt-financed property,for purposes of the unrelated business income tax?

Accepted Answer

A) The principal purpose of acquiring the land is for investment. 
B) The land is used within ten years of the acquisition date in the organization's exempt purpose. 
C) The land is located in the United States. 
D) Only a.and b. 
A) The principal purpose of acquiring the land is for investment. 
B) The land is used within ten years of the acquisition date in the organization's exempt purpose. 
C) The land is located in the United States. 
D) Only a.and b.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Which of the following attributes are associated with exempt organizations?

Accepted Answer

A) Organization serves some type of common good. 
B) Organization is not a for profit entity. 
C) Net earnings do not benefit the members of the organization. 
D) Organization does not exert political influence. 
E) All of the above statements are true. 
A) Organization serves some type of common good. 
B) Organization is not a for profit entity. 
C) Net earnings do not benefit the members of the organization. 
D) Organization does not exert political influence. 
E) All of the above statements are true.

Question 19

Which of the following statements regarding exempt organization filing requirements is incorrect?

Accepted Answer

A) Churches are required to file Form 990 (Return of Organization Exempt from Income Tax) only if its annual gross receipts exceed $50,000. 
B) The due date for Form 990 (Return of Organization Exempt from Income Tax) is the fifteenth day of the fifth month after the end of the taxable year,whereas for private foundations the due date for Form 990-PF (Return of Private Foundation) is the fifteenth day of the fourth month after the end of the tax year. 
C) Exempt organizations whose annual gross receipts do not exceed $50,000 can file an e-Postcard. 
D) Only a.and b.are incorrect. 
E) a.,b.,and c.are incorrect. 
A) Churches are required to file Form 990 (Return of Organization Exempt from Income Tax) only if its annual gross receipts exceed $50,000. 
B) The due date for Form 990 (Return of Organization Exempt from Income Tax) is the fifteenth day of the fifth month after the end of the taxable year,whereas for private foundations the due date for Form 990-PF (Return of Private Foundation) is the fifteenth day of the fourth month after the end of the tax year. 
C) Exempt organizations whose annual gross receipts do not exceed $50,000 can file an e-Postcard. 
D) Only a.and b.are incorrect. 
E) a.,b.,and c.are incorrect.

Question 20

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

Exam 23: Exempt Entities

Discuss benefits for which an exempt organization may be eligible,other than exemption from Federal income tax.

Which of the following statements are correct?

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.

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

A church is one of the types of exempt organizations.

Blue,Inc.,receives its support from the following sources. Which of the following statements is correct?

What is the purpose of the unrelated business income tax?

The unrelated business income tax (UBIT) is calculated by multiplying unrelated business taxable income by the highest corporate tax rate.

The purpose of the excise tax imposed on a private foundation for failure to distribute sufficient levels of income is to motivate the foundation to distribute more of its income for application to exempt purposes.

The trade or business of selling merchandise where substantially all of the merchandise has been received as contributions or gifts is not subject to the unrelated business income tax.

Which of the following is a requirement that will enable mortgaged land acquired by an exempt organization for later exempt use to be excluded from debt-financed property,for purposes of the unrelated business income tax?

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

Which of the following attributes are associated with exempt organizations?

Which of the following statements regarding exempt organization filing requirements is incorrect?

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%).

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

Filters