Question 1

An activity is not an unrelated trade or business for purposes of the unrelated business income tax (UBIT)unless it is profitable.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is correct?

Accepted Answer

A) A private foundation is,in general,exempt from Federal income tax. 
B) A private foundation may be subject to certain types of Federal income tax. 
C) If a broad public support test is satisfied,an exempt organization that otherwise would be classified as a private foundation is not classified as a private foundation. 
D) Only b.and c.are correct. 
E) a. ,b. ,and c.are correct. 
A) A private foundation is,in general,exempt from Federal income tax. 
B) A private foundation may be subject to certain types of Federal income tax. 
C) If a broad public support test is satisfied,an exempt organization that otherwise would be classified as a private foundation is not classified as a private foundation. 
D) Only b.and c.are correct. 
E) a. ,b. ,and c.are correct.

Question 3

Acquisition indebtedness consists of the unpaid amounts of which of the following for debt-financed property?

Accepted Answer

A) Debt incurred in acquiring or improving the property. 
B) Debt incurred to enable the organization to carry out its exempt purpose. 
C) Debt incurred to enable the exempt organization to acquire a feeder organization. 
D) Only a.and b. 
E) a. ,b. ,and c. 
A) Debt incurred in acquiring or improving the property. 
B) Debt incurred to enable the organization to carry out its exempt purpose. 
C) Debt incurred to enable the exempt organization to acquire a feeder organization. 
D) Only a.and b. 
E) a. ,b. ,and c.

Question 4

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 5

Even though a church is not required to obtain IRS approval of its exempt status,it still must file Form 990 (Return of Organization Exempt from Income Tax)annually.

Accepted Answer

A) True 
 B)False

Question 6

First Americans,Inc. ,a § 501(c)(3)organization,operates a museum which depicts the lives of a tribe of Native Americans.It charges an admission fee,but also finances its operations through endowment income,contributions,and gift shop sales.The gift shop is operated by 60 volunteers and the museum is operated by 10 employees.Revenue by source is:
   Determine the amount of First Americans' unrelated business income.

Accepted Answer

The only potential source of unrelated b

Question 7

Which of the following are available options for the IRS in dealing with an exempt organization entering into prohibited transactions?

Accepted Answer

A) Attempt to subject all or part of the organization's income to Federal income tax. 
B) Revoke the exempt status of the organization. 
C) Impose intermediate sanctions in the form of excise taxes. 
D) Only a.and b. 
E) a. ,b. ,and c. 
A) Attempt to subject all or part of the organization's income to Federal income tax. 
B) Revoke the exempt status of the organization. 
C) Impose intermediate sanctions in the form of excise taxes. 
D) Only a.and b. 
E) a. ,b. ,and c.

Question 8

A church that is exempt under § 501(c)(3)cannot be classified as a private foundation.

Accepted Answer

A) True 
 B)False

Question 9

If an exempt organization is subject to intermediate sanctions,it forfeits its exempt status.

Accepted Answer

A) True 
 B)False

Question 10

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 and thus be classified as a feeder organization.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Radio,Inc. ,an exempt organization,trains disabled individuals to be radio announcers.Rather than hold a traditional graduation exercise,the graduates compete in a radio announcer contest.Such activities are held four times each year.An admission fee of $10 is charged to the general public to attend the contest.Eight hundred people attended the contest this year,and prizes of $2,000 were given to the top 3 graduates.Calculate the amount of Radio's unrelated business income from this activity.

Accepted Answer

The contest activity is not classified a

Question 13

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.

Accepted Answer

Miracle is eligible for and thus makes t

Question 14

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.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Which of the following statements is correct?

Accepted Answer

A) Exempt organizations cannot engage in significant levels of lobbying activities. 
B) Certain exempt organizations can elect to engage in lobbying activities on a limited basis. 
C) Churches can engage in lobbying activities on an unlimited basis because of the separation of church and state provision. 
D) Only a.and b.are correct. 
E) Only a.and c.are correct. 
A) Exempt organizations cannot engage in significant levels of lobbying activities. 
B) Certain exempt organizations can elect to engage in lobbying activities on a limited basis. 
C) Churches can engage in lobbying activities on an unlimited basis because of the separation of church and state provision. 
D) Only a.and b.are correct. 
E) Only a.and c.are correct.

Question 17

In calculating unrelated business taxable income,the exempt organization is permitted to deduct only the charitable contributions associated with the unrelated trade or business.

Accepted Answer

A) True 
 B)False

Question 18

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 $25,000. 
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) All exempt organizations whose annual gross receipts do not exceed $25,000 do not need to file either Form 990 (Return of Organization Exempt from Income Tax)or Form 990-PF (Return of Private Foundation). 
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 $25,000. 
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) All exempt organizations whose annual gross receipts do not exceed $25,000 do not need to file either Form 990 (Return of Organization Exempt from Income Tax)or Form 990-PF (Return of Private Foundation). 
D) Only a.and b.are incorrect. 
E) a. ,b. ,and c.are incorrect.

Question 19

Discuss any negative tax consequences that result from an exempt organization being classified as a private foundation.

Accepted Answer

Two potential negative tax consequences

Question 20

The key factor in determining whether an exempt entity's income from a bingo game is unrelated trade or business income is whether substantially all the work is performed by volunteers.

Accepted Answer

A) True 
 B)False

Exam 23: Exempt Entities

An activity is not an unrelated trade or business for purposes of the unrelated business income tax (UBIT)unless it is profitable.

Which of the following statements is correct?

Acquisition indebtedness consists of the unpaid amounts of which of the following for debt-financed property?

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

Even though a church is not required to obtain IRS approval of its exempt status,it still must file Form 990 (Return of Organization Exempt from Income Tax)annually.

Which of the following are available options for the IRS in dealing with an exempt organization entering into prohibited transactions?

A church that is exempt under § 501(c)(3)cannot be classified as a private foundation.

If an exempt organization is subject to intermediate sanctions,it forfeits its exempt status.

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 and thus be classified as a feeder organization.

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.

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.

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

Which of the following statements is correct?

In calculating unrelated business taxable income,the exempt organization is permitted to deduct only the charitable contributions associated with the unrelated trade or business.

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

Discuss any negative tax consequences that result from an exempt organization being classified as a private foundation.

The key factor in determining whether an exempt entity's income from a bingo game is unrelated trade or business income is whether substantially all the work is performed by volunteers.

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

Filters