Exam 23: Exempt Entities

Orange,Inc. ,a private foundation,engages in a transaction with a disqualified person in the amount of $800,000.Calculate the tax on self-dealing.Assume that corrective action is taken so that the additional tax does not apply.

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Question 1

Correct Answer:

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The initial tax on the disqualified person is $40,000 ($800,000 * 5%).The tax is levied on the disqualified person,not on the private foundation.The initial tax on the foundation manager would be $20,000 ($800,000 * 2.5%),but it is limited to a statutory ceiling of $10,000.

Exchanging with or renting to other for-profit organizations the exempt organization's donor or membership list is not an unrelated trade or business.

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(True/False)

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Question 2

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False

Well,Inc. ,a private foundation,makes a speculative investment of $500,000 that puts the foundation assets at risk.Calculate the tax on jeopardizing investments.Assume that corrective action is taken so that the additional tax does not apply.

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Question 3

Correct Answer:

Verified

The initial tax on the private foundation is $25,000 ($500,000 * 5%).The initial tax on the foundation manager is $25,000 ($500,000 * 5%),but limited by statute to $5,000.

The due date for both Form 990 (Return of Organization Exempt from Income Tax)and Form 990-PF (Return of Private Foundation)is the fifteenth day of the fifth month after the end of the taxable year.

(True/False)

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Question 4

Which of the following is a requirement for exempt status?

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Question 5

Certain exempt organizations can engage in lobbying to the same extent as for-profit corporations.

(True/False)

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Question 6

Soft,Inc. ,a § 501(c)(3)organization,has been leasing a building to Polar,Inc. ,a taxable entity,for 15 years.The lease terminates in the current tax year.Soft'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 $14,000.

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Question 7

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?

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Question 8

Joyful,Inc. ,a tax-exempt organization,leases a building and machinery to White Partnership.The rental income from the building is $150,000,with related expenses of $60,000.The rental income from the machinery is $13,500,with related expenses of $4,500.What adjustment must be made to net unrelated business income?

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Question 9

One reason for granting an exemption from Federal income tax to certain organizations is the belief that such organizations can perform certain government-like functions,and thereby reduce the financial burden that would otherwise fall on the Federal government.

(True/False)

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Question 10

Personal property rental income is subject to and real property rental income is not subject to the unrelated business income tax.

(True/False)

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Question 11

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

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Question 12

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 included in the requirements?

(Multiple Choice)

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Question 13

Which of the following taxes that are imposed on private foundations is,effectively,an audit fee to defray IRS expenses?

(Multiple Choice)

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Question 14

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

(True/False)

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Question 15

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?

(Multiple Choice)

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Question 16

The tax consequences to a donor of making a charitable contribution to an exempt organization classified as a private foundation are the same as the tax consequences to a donor of making a charitable contribution to an exempt organization that is not classified as a private foundation.

(True/False)

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Question 17

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

(Multiple Choice)

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Question 18

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

(True/False)

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Question 19

Which exempt organizations are not required to file an annual Federal tax return?

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Question 20

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Exam 23: Exempt Entities

Orange,Inc. ,a private foundation,engages in a transaction with a disqualified person in the amount of $800,000.Calculate the tax on self-dealing.Assume that corrective action is taken so that the additional tax does not apply.

Exchanging with or renting to other for-profit organizations the exempt organization's donor or membership list is not an unrelated trade or business.

Well,Inc. ,a private foundation,makes a speculative investment of $500,000 that puts the foundation assets at risk.Calculate the tax on jeopardizing investments.Assume that corrective action is taken so that the additional tax does not apply.

The due date for both Form 990 (Return of Organization Exempt from Income Tax)and Form 990-PF (Return of Private Foundation)is the fifteenth day of the fifth month after the end of the taxable year.

Which of the following is a requirement for exempt status?

Certain exempt organizations can engage in lobbying to the same extent as for-profit corporations.

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?

One reason for granting an exemption from Federal income tax to certain organizations is the belief that such organizations can perform certain government-like functions,and thereby reduce the financial burden that would otherwise fall on the Federal government.

Personal property rental income is subject to and real property rental income is not subject to the unrelated business income tax.

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

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 included in the requirements?

Which of the following taxes that are imposed on private foundations is,effectively,an audit fee to defray IRS expenses?

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

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 tax consequences to a donor of making a charitable contribution to an exempt organization classified as a private foundation are the same as 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 excise taxes are imposed on the private foundation because it engages in prohibited transactions?

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

Which exempt organizations are not required to file an annual Federal tax return?

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

Part 1--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Part 2--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses,1231,and Recapure Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Distributions in Complete Liquidation and an Overview of Reorganizations

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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