FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 15: Exempt Entities

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Essay

Review LaterAdd Note

Review Later

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

Correct Answer

verified

Two potential negative tax consequences ...

View Answer

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

Match the following statements. -Tax on self-dealing

A) May be subject to some Federal income taxation, and classification may adversely affect the 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.

E) A) and B)
F) B) and D)

Correct Answer

verified

Show Answer

Question 43

Multiple Choice

Review LaterAdd Note

A museum's lobbying nontaxable amount is $600,000. Its grass roots nontaxable amount is:

Match the following statements. -Tax on excess business holdings

Match the following tax forms. -Form 990

Assist, Inc., a § 501c)3) organization, receives the following sources of support during the tax year. $\begin{array}{lr}\text { General public for services rendered } & \$ 22,000 \\\text { Governmental unit A for services rendered } & 30,000 \\\text { Governmental unit B for services rendered } & 3,000 \\\text { Governmental unit C for services rendered } & 8,000 \\\text { Gross investment income } & 19,000\end{array}$ Contributions from individual disqualified persons 18,000 Is Assist, Inc., classified as a private foundation? Explain.

Agnes is aware that a feeder organization is subject to Federal income taxation. She wonders whether an organization that is otherwise taxable as a feeder organization can avoid such status if it remits at least 80% of its profits to the § 501c)3) entity.

Only certain exempt organizations must obtain IRS approval to obtain exempt status.

Engaging in a prohibited transaction can result in an exempt organization being subject to Federal income tax, but such an act cannot cause the entity to lose its exempt status unless the exempt organization repeats the prohibited transaction.

Matching Give an example of the indicated types of exempt organizations. -§ 501c) 4) civic league

Which of the following statements is correct regarding the unrelated business income tax UBIT) ?

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?

Watch, Inc., a § 501c)3) exempt organization, solicits contributions through a mail campaign. An executive who recently completed an executive MBA degree program recommends that personal address labels be included as an additional way to motivate the potential donor to contribute. The value of these labels is $3.95 per potential donor. What is the effect of the inclusion of the address labels on Watch's unrelated business income?

All exempt organizations that are subject to the unrelated business income tax must file Form 990-T Exempt Organization Business Income Tax Return).

City, Inc., an exempt organization, has included among other amounts the following in calculating net unrelated business income of $500,000. $\begin{array}{lr}\text { Dividend income } & \$ 12,000 \\\text { Interest income } & 6,000 \\\text { Royalty income } & 15,000 \\\text { Rent income from } & \\\text { equipment } & 25,000\end{array}$ The only expenses incurred associated with these items are rental expenses which includes depreciation of $10,000) of $15,000. Calculate City, Inc.'s UBTI.

For each of the following taxes that are imposed on private foundations and/or foundation managers, match the appropriate initial tax or additional tax. -Tax on self-dealing

Match the following statements. -Branded tote bags

For purposes of the unrelated business income tax UBIT), a trade or business consists of any activity conducted for the production of income through the sale of merchandise, or from the performance of services for which profits have been earned during at least three of the five previous years.

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

Federal agencies exempt from Federal income tax under § 501c)1) are not subject to the unrelated business income tax UBIT).