Question 1

Describe how an exempt organization can be eligible to make lobbying expenditures without losing its tax exemption.

Accepted Answer

Certain exempt organizations are permitt...

Question 2

An educational organization such as the College of William and Mary that is exempt under § 501(c)(3) cannot be classified as a private foundation if its only sources of revenue are from tuition and alumni contributions.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following requirements must be satisfied for a bingo game to be classified as not being an unrelated trade or business?

Accepted Answer

A)   The bingo game is legal under both state and local law.
B)   The bingo game is conducted by volunteers.
C)   For-profit bingo games ordinarily are not permitted in the jurisdiction.
D)   Only a. and b. must be satisfied.
E)   Only a. and c. must be satisfied.F) A) and E)
G) B) and C)

Question 4

Teal, Inc., is a private foundation which failed to distribute an adequate amount of income for the exempt purpose of Teal. Which of the following statements is correct?

Accepted Answer

A)   An excise tax in the form of an initial tax at the rate of 10% may be imposed on Teal.
B)   An excise tax in the form of an initial tax at the rate of 5% may be imposed on the foundation manager.
C)   An excise tax in the form of an additional tax at the rate of 100% may be imposed on Teal.
D)   An excise tax in the form of an additional tax at the rate of 50% may be imposed on the foundation manager.E) A) and D)
F) B) and C)

Question 5

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.
Miracle is eligible for and thus makes the § 501(h) election. It calculates the lobbying nontaxable amount to be $100,000 ($500,000 exempt purpose expenditures × 20%). The total lobbying expenditures for the year were $115,000. Calculate Miracle's tax on excess lobbying expenditures.

Accepted Answer

Since Miracle's lobbying expenses of $11...

Question 6

The Form 990-N:

Accepted Answer

A)   Is filed by new exempt entities.
B)   Records the asset holdings and liabilities of the exempt organization.
C)   Is also known as the e-Postcard.
D)   No longer is required.E) A) and B)
F) A) and C)

Question 7

What is the purpose of the "broadly supported" exception for an exempt organization being classified as a private foundation?

Accepted Answer

The intent of the external support test ...

Question 8

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.F) A) and E)
G) C) and D) E

Question 9

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

Accepted Answer

The tax model for unrelated business tax...

Question 10

Which of the following statements is correct regarding the disclosure Regulations for exempt entities?

Accepted Answer

A)   Posting the required tax forms on the Internet is an acceptable technique for satisfying the "widely available" requirement.
B)   Forms 990 and 1023 must be readily available to the general public.
C)   If an individual requests a copy of the required tax forms in writing, the exempt entity must provide a copy within 30 days.
D)   Only a. and b. are correct.
E)   a., b., and c. are all correct.F) A) and D)
G) B) and D)

Question 11

Which of the following statements are correct with respect to the unrelated business income tax?

Accepted Answer

A)   Under certain circumstances, a corporate sponsorship payment can be classified as not being an unrelated trade or business.
B)   Under certain circumstances, a casino game can be classified as not being an unrelated trade or business.
C)   Under certain circumstances, the exchanging or renting of membership lists to other exempt organizations can be classified as not being an unrelated trade or business.
D)   Only a. and c. are correct.
E)   a., b., and c. are all correct.F) A) and C)
G) D) and E)

Question 12

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 13

Faith Church, a § 501(c)(3) organization, operates a bingo game two times each week to raise money to support the youth activities of the church. For the current year, net proceeds from the bingo game are $900,000.
a.Determine the tax consequences for Faith Church if the bingo game is conducted in a jurisdiction where for-profit bingo games are illegal, and where the bingo game is legal for exempt entities.
b.Determine the tax consequences for Faith Church if the bingo game is conducted in a jurisdiction where bingo games are legal for both for-profit and exempt entities.

Accepted Answer

a. In this case, the $900,000 is exempt ...

Question 14

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 a requirement?

Accepted Answer

A)   The principal purpose of acquiring the land is for use (substantially all)  in achieving the organization's exempt purpose.
B)   The fair market value of the land is not over 50% of the fair market value of land presently owned by the exempt organization.
C)   The use of the land by the exempt organization will begin within ten years of the acquisition date.
D)   At the date the land is acquired, it is located in the neighborhood of other property of the organization for which substantially all the use is for achieving the organization's exempt purpose.E) B) and D)
F) B) and C)

Question 15

A church is one of the types of exempt organizations.

Accepted Answer

A) True 
 B)False

Question 16

Hospital wants to avoid the UBIT on its gift shop sales. To the extent possible, Hospital should:

Accepted Answer

A)   Sell on-site flowers and other items that will cheer up its patients.
B)   Sell through its website inspirational books and music to customers around the world.
C)   Both a. and b.
D)   Neither a. nor b.E) B) and C)
F) A) and D)

Question 17

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 18

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.E) A) and B)
F) A) and C)

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.
-Tax on self-dealing

Accepted Answer

b

Question 20

An eligible § 501(c)(3) organization has made the § 501(h) election to participate in lobbying on a limited basis. If the lobbying nontaxable amount is exceeded, what are the potential tax consequences to the exempt organization?

Accepted Answer

First, a tax is levied on the excess lobbying expenditures. Second, such excess lobbying expenditures could result in revocation of exempt status by the IRS if the amount is exceeded repeatedly.

Exam 23: Exempt Entities

Describe how an exempt organization can be eligible to make lobbying expenditures without losing its tax exemption.

Correct Answer
verified
Certain exempt organizations are permitt...
View Answer

An educational organization such as the College of William and Mary that is exempt under § 501(c)(3) cannot be classified as a private foundation if its only sources of revenue are from tuition and alumni contributions.

Correct Answer
verified

Which of the following requirements must be satisfied for a bingo game to be classified as not being an unrelated trade or business?

Correct Answer
verified

Teal, Inc., is a private foundation which failed to distribute an adequate amount of income for the exempt purpose of Teal. Which of the following statements is correct?

Correct Answer
verified

Correct Answer
verified
Since Miracle's lobbying expenses of $11...
View Answer

The Form 990-N:

Correct Answer
verified

What is the purpose of the "broadly supported" exception for an exempt organization being classified as a private foundation?

Correct Answer
verified
The intent of the external support test ...
View Answer

Which of the following attributes are associated with exempt organizations?

Correct Answer
verified
E

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

Correct Answer
verified
The tax model for unrelated business tax...
View Answer

Which of the following statements is correct regarding the disclosure Regulations for exempt entities?

Correct Answer
verified

Which of the following statements are correct with respect to the unrelated business income tax?

Correct Answer
verified

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.

Correct Answer
verified

Correct Answer
verified
a. In this case, the $900,000 is exempt ...
View Answer

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 a requirement?

Correct Answer
verified

A church is one of the types of exempt organizations.

Correct Answer
verified

Hospital wants to avoid the UBIT on its gift shop sales. To the extent possible, Hospital should:

Correct Answer
verified

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.

Correct Answer
verified

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

Correct Answer
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Correct Answer
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b

An eligible § 501(c)(3) organization has made the § 501(h) election to participate in lobbying on a limited basis. If the lobbying nontaxable amount is exceeded, what are the potential tax consequences to the exempt organization?

Correct Answer
verified
First, a tax is levied on the excess lobbying expenditures. Second, such excess lobbying expenditures could result in revocation of exempt status by the IRS if the amount is exceeded repeatedly.

Exam 23: Exempt Entities

Describe how an exempt organization can be eligible to make lobbying expenditures without losing its tax exemption.

Correct AnswerverifiedCertain exempt organizations are permitt...View AnswerShow Answer

An educational organization such as the College of William and Mary that is exempt under § 501(c)(3) cannot be classified as a private foundation if its only sources of revenue are from tuition and alumni contributions.

Correct AnswerverifiedShow Answer

Which of the following requirements must be satisfied for a bingo game to be classified as not being an unrelated trade or business?

Correct AnswerverifiedShow Answer

Teal, Inc., is a private foundation which failed to distribute an adequate amount of income for the exempt purpose of Teal. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedSince Miracle's lobbying expenses of $11...View AnswerShow Answer

The Form 990-N:

Correct AnswerverifiedShow Answer

What is the purpose of the "broadly supported" exception for an exempt organization being classified as a private foundation?

Correct AnswerverifiedThe intent of the external support test ...View AnswerShow Answer

Which of the following attributes are associated with exempt organizations?

Correct AnswerverifiedE

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

Correct AnswerverifiedThe tax model for unrelated business tax...View AnswerShow Answer

Which of the following statements is correct regarding the disclosure Regulations for exempt entities?

Correct AnswerverifiedShow Answer

Which of the following statements are correct with respect to the unrelated business income tax?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct Answerverifieda. In this case, the $900,000 is exempt ...View AnswerShow Answer

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 a requirement?

Correct AnswerverifiedShow Answer

A church is one of the types of exempt organizations.

Correct AnswerverifiedShow Answer

Hospital wants to avoid the UBIT on its gift shop sales. To the extent possible, Hospital should:

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answerverifiedb

An eligible § 501(c)(3) organization has made the § 501(h) election to participate in lobbying on a limited basis. If the lobbying nontaxable amount is exceeded, what are the potential tax consequences to the exempt organization?

Correct AnswerverifiedFirst, a tax is levied on the excess lobbying expenditures. Second, such excess lobbying expenditures could result in revocation of exempt status by the IRS if the amount is exceeded repeatedly.

Correct Answer
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Certain exempt organizations are permitt...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Since Miracle's lobbying expenses of $11...
View Answer

Correct Answer
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Correct Answer
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The intent of the external support test ...
View Answer

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E

Correct Answer
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The tax model for unrelated business tax...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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a. In this case, the $900,000 is exempt ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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b

Correct Answer
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First, a tax is levied on the excess lobbying expenditures. Second, such excess lobbying expenditures could result in revocation of exempt status by the IRS if the amount is exceeded repeatedly.