Question 1

General requirements for exempt status include the organization serving the common good and the organization being a not-for-profit entity.

Accepted Answer

A) True 
 B)False

Question 2

Third Church operates a gift shop in its parish house. The total income of the church is $800,000. Of this amount, $300,000 comes from offerings and $500,000 comes from the net income of the gift shop. The gift shop operations are conducted by six full-time, paid employees. Which of the following statements is correct?

Accepted Answer

A)  The $800,000 is unrelated business income. 
B)  The $500,000 of gift shop net income is unrelated business income. 
C)  The $300,000 is unrelated business income because the gift shop is a feeder organization. 
D)  None of the $800,000 is unrelated business income. 
E)  The unrelated business income tax does not apply to churches. 
A)  The $800,000 is unrelated business income. 
B)  The $500,000 of gift shop net income is unrelated business income. 
C)  The $300,000 is unrelated business income because the gift shop is a feeder organization. 
D)  None of the $800,000 is unrelated business income. 
E)  The unrelated business income tax does not apply to churches.

Question 3

Give an example of the indicated types of exempt organizations.
a. League of Women Voters.
b. Teachers' association.
c. American Plywood Association. 
d. Six Flags over Texas theme park. 
e. Salvation Army.
-§ 501(c)(5) labor organization

Accepted Answer

The answer of Give an example of the indicated types...

Question 4

Garden, Inc., a qualifying § 501(c)(3) organization, incurs lobbying expenditures of $210,000 during the taxable year. Exempt purpose expenditures are $900,000. If Garden makes the election under § 501(h) to make lobbying expenditures on a limited basis, its tax liability resulting from the lobbying expenditures is:

Accepted Answer

A)  $0. 
B)  $12,500. 
C)  $50,000. 
D)  $60,000. 
E)  None of the above. 
A)  $0. 
B)  $12,500. 
C)  $50,000. 
D)  $60,000. 
E)  None of the above.

Question 5

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 6

Revenue generated by an exempt organization from the distribution of low-cost items is not income from an unrelated trade or business.

Accepted Answer

A) True 
 B)False

Question 7

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. Will the lobbying expense result in Help losing its exempt status?
b. Calculate the amount of any tax that Help must pay associated with its lobbying expenses.

Accepted Answer

a. No. Help is not in danger of losing i

Question 8

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 9

Both of these organizations are exempt from Federal income tax. Political activities can be conducted without IRS sanction by:

Accepted Answer

A)  The North Platte Community Church. 
B)  The American Plywood Association. 
C)  Both a. and b. 
D)  Neither a. nor b. 
A)  The North Platte Community Church. 
B)  The American Plywood Association. 
C)  Both a. and b. 
D)  Neither a. nor b.

Question 10

Give an example of the indicated types of exempt organizations.
a. League of Women Voters.
b. Teachers' association.
c. American Plywood Association. 
d. Six Flags over Texas theme park. 
e. Salvation Army.
-§ 501(c)(4) civic league

Accepted Answer

The answer of Give an example of the indicated types...

Question 11

Match the following tax forms.
a. Return of Private Foundation.
b. Application for Recognition of Exemption under § 501(c)(3).
c. Return of Organization Exempt from Income Tax.
d. Application for Recognition of Exemption under § 501(a).
-Form 990

Accepted Answer

The answer of Match the following tax forms.
a. Return of...

Question 12

Match the following statements.
a. Distribution of such items is not considered an unrelated trade or business if they are "low-cost items".
b. Is considered an unrelated trade or business if the amount received is contingent upon the level of attendance at one or more events
c. Is considered an unrelated trade or business if legally it can be conducted by commercial (for-profit) entities. 
d. A trade or business that consists of either renting or exchanging these with another exempt organization is not an unrelated trade or business.
-Bingo games

Accepted Answer

The answer of Match the following statements.
a. Distribution of such...

Question 13

Why are some organizations exempt from Federal income tax?

Accepted Answer

The Code's treatment of exempt organizat

Question 14

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 15

To provide the greatest Federal income tax benefits for its donors, Orchestra would prefer to be a:

Accepted Answer

A)  Public charity. 
B)  Private foundation. 
C)  C corporation. 
D)  Feeder organization. 
A)  Public charity. 
B)  Private foundation. 
C)  C corporation. 
D)  Feeder organization.

Question 16

All organizations that are exempt from Federal income tax are charities under § 501(c)(3).

Accepted Answer

A) True 
 B)False

Question 17

Which of the following taxes can be imposed on private foundations?

Accepted Answer

A)  Tax on self-dealing. 
B)  Tax on failure to distribute income. 
C)  Tax on excess business holdings. 
D)  Only a. and c. 
E)  All of the above. 
A)  Tax on self-dealing. 
B)  Tax on failure to distribute income. 
C)  Tax on excess business holdings. 
D)  Only a. and c. 
E)  All of the above.

Question 18

To satisfy the broadly supported provision to avoid classification as a private foundation, the exempt organization must satisfy both an external support test and an internal support test. Under the internal support test, more than one- third of the exempt organization's support for the taxable year must come from gross investment income and unrelated business taxable income.

Accepted Answer

A) True 
 B)False

Question 19

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.
-Private foundation

Accepted Answer

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

Question 20

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

Accepted Answer

In addition to being exempt from Federal

Exam 23: Exempt Entities

General requirements for exempt status include the organization serving the common good and the organization being a not-for-profit entity.

Give an example of the indicated types of exempt organizations. a. League of Women Voters. b. Teachers' association. c. American Plywood Association. d. Six Flags over Texas theme park. e. Salvation Army. -§ 501(c)(5) labor organization

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

Revenue generated by an exempt organization from the distribution of low-cost items is not income from an unrelated trade or business.

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

Both of these organizations are exempt from Federal income tax. Political activities can be conducted without IRS sanction by:

Give an example of the indicated types of exempt organizations. a. League of Women Voters. b. Teachers' association. c. American Plywood Association. d. Six Flags over Texas theme park. e. Salvation Army. -§ 501(c)(4) civic league

Match the following tax forms. a. Return of Private Foundation. b. Application for Recognition of Exemption under § 501(c)(3). c. Return of Organization Exempt from Income Tax. d. Application for Recognition of Exemption under § 501(a). -Form 990

Why are some organizations exempt from Federal income tax?

To provide the greatest Federal income tax benefits for its donors, Orchestra would prefer to be a:

All organizations that are exempt from Federal income tax are charities under § 501(c)(3).

Which of the following taxes can be imposed on private foundations?

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

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, Section 1231, and Recapture Provisions

Taxing Business Income

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 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