Question 1

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?

Accepted Answer

If the following requirements are satisf...

Question 2

For each of the following taxes which are imposed on private foundations and/or Foundation Managers, match the appropriate initial tax or additional tax
-Tax on self-dealing

Accepted Answer

A)  5% initial tax and 25% additional tax on private foundation.
B)  15% initial tax and 100% additional tax on private foundation.
C)  100% additional tax on private foundation and 50% additional tax on foundation manager.
D)  5% initial tax and 200% additional tax on private foundation.
E)  5% initial tax and 200% additional tax on the disqualified person.F) A) and E)
G) B) and D)

Question 3

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.F) B) and D)
G) A) and B)

Question 4

Plus, Inc., is a § 501(c)(3) organization. It generates a small amount of net income each year. Ralph, the CEO of Plus, Inc., is concerned that Plus may be subject to the unrelated business income tax. Is there a materiality exception to this tax? A 501(c)(3) with "net income" does not automatically result in a UBIT classification. They must be conducting a trade or business that is regularly carried on and that is not substantially related to its exempt purpose.

Accepted Answer

Yes. The materiality exception...

Question 5

Match the following statements
-Tax on excess business holdings

Accepted Answer

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 on investments that enable a private foundation to control unrelated for-profit businesses.​​D) B) and C)
E) None of the above

Question 6

Match the following tax forms
-Form 1024

Accepted Answer

A)  Return of Private Foundation.
B)  Application for Recognition of Exemption under § 501(c) (3) .
C)  Return of Organization Exempt from Income Tax.
D)  Return of Certain Excise Taxes on Charities and Other Persons under Chapters 41 and 42 of the Internal Revenue Code.
E)  Application for Recognition of Exemption under § 501(a) .F) Application for Extension of Time.G) B) and F)
H) All of the above

Question 7

The due date for the Exempt Organization Business Income Tax Return (Form 990-T) is the fifteenth day of the third month after the end of the taxable year.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)   To be subject to the UBIT, the exempt organization must conduct a trade or business, the trade or business is not substantially related to the exempt purpose of the organization, and the trade or business is regularly carried on by the organization.
B)   To be subject to the UBIT, the exempt organization must conduct a trade or business, the trade or business must be substantially related to the exempt purpose of the organization, and the trade or business must be regularly carried on by the organization.
C)   To be subject to the UBIT, the exempt organization must conduct a trade or business, the trade or business is not substantially related to the exempt purpose of the organization, and the trade or business is carried on during more than half the year.
D)   An exempt entity that conducts a business that competes with for-profit businesses automatically is subject to the UBIT.
E)   None of the above statements is correct.F) A) and B)
G) All of the above

Question 9

Unless the "widely available" provision is satisfied, a § 501(c)(3) exempt organization (excluding churches and private foundations) must make copies of the following available to the general public: Form 990 (Return of Organization Exempt from Income Tax) and Form 1023 [Application for Recognition of Exemption under § 501(c)(3)] or Form 1024 [Application for Recognition of Exemption under § 501(a)].

Accepted Answer

A) True 
 B)False

Question 10

Unrelated debt-financed income, net of the unrelated debt-financed deductions, is subject to the unrelated business income tax only if the exempt organization is a private foundation.

Accepted Answer

A) True 
 B)False

Question 11

Tan, Inc., a tax-exempt organization, has $65,000 of net unrelated business income. Total charitable contributions (all associated with the unrelated trade or business)  are $7,500. Assuming that the $7,500 was deducted in calculating net unrelated business income, what is Tan's unrelated business taxable income?

Accepted Answer

A)   $57,500
B)   $65,250
C)   $66,000
D)   $72,500
E)   Some other amount.F) A) and B)
G) A) and C)

Question 12

A feeder organization is exempt from Federal income taxation because it carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt entity.

Accepted Answer

A) True 
 B)False

Question 13

Match the following statements
-Debt-financed income is the net income from debt financed property.

Accepted Answer

A)  Exempt from tax on unrelated business.
B)  Inappropriate definition.
C)  Exempt organization may be subject to the tax on unrelated business income.
D)  Annual information return of an exempt organization that is required to file a return and which is not a private foundation.
E)  Appropriate definition.f.Annual information return of a private foundation.F) B) and D)
G) B) and E)

Question 14

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.F) All of the above
G) A) and D)

Question 15

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)   None of the statements is true.F) B) and D)
G) C) and D)

Question 16

Define a qualified corporate sponsorship payment.

Accepted Answer

A payment qualifies as a qualified spons...

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

Match the following statements
-The trade or business is not substantially related to the exempt purpose of the organization.

Accepted Answer

A)  Exempt from tax on unrelated business.
B)  Inappropriate definition.
C)  Exempt organization may be subject to the tax on unrelated business income.
D)  Annual information return of an exempt organization that is required to file a return and which is not a private foundation.
E)  Appropriate definition.f.Annual information return of a private foundation.F) A) and C)
G) B) and D)

Question 19

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 20

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

Accepted Answer

A) True 
 B)False

Exam 15: Exempt Entities

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

Correct Answer
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For each of the following taxes which are imposed on private foundations and/or Foundation Managers, match the appropriate initial tax or additional tax -Tax on self-dealing

Correct Answer
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Match the following statements -The trade or business is not substantially related to the exempt purpose of the organization.

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

Correct Answer
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The due date for the Exempt Organization Business Income Tax Return (Form 990-T) is the fifteenth day of the third month after the end of the taxable year.

Correct Answer
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Unrelated debt-financed income, net of the unrelated debt-financed deductions, is subject to the unrelated business income tax only if the exempt organization is a private foundation.

Correct Answer
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Correct Answer
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Yes. The materiality exception...
View Answer

Match the following statements -Tax on excess business holdings

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

Correct Answer
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A feeder organization is exempt from Federal income taxation because it carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt entity.

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

Match the following tax forms -Form 1024

Correct Answer
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Define a qualified corporate sponsorship payment.

Correct Answer
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A payment qualifies as a qualified spons...
View Answer

Match the following statements -Debt-financed income is the net income from debt financed property.

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

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

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

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?

Correct Answer
verified
If the following requirements are satisf...
View Answer

Exam 15: Exempt Entities

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

Correct AnswerverifiedShow Answer

For each of the following taxes which are imposed on private foundations and/or Foundation Managers, match the appropriate initial tax or additional tax -Tax on self-dealing

Correct AnswerverifiedShow Answer

Match the following statements -The trade or business is not substantially related to the exempt purpose of the organization.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The due date for the Exempt Organization Business Income Tax Return (Form 990-T) is the fifteenth day of the third month after the end of the taxable year.

Correct AnswerverifiedShow Answer

Unrelated debt-financed income, net of the unrelated debt-financed deductions, is subject to the unrelated business income tax only if the exempt organization is a private foundation.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedYes. The materiality exception...View AnswerShow Answer

Match the following statements -Tax on excess business holdings

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A feeder organization is exempt from Federal income taxation because it carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt entity.

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

Match the following tax forms -Form 1024

Correct AnswerverifiedShow Answer

Define a qualified corporate sponsorship payment.

Correct AnswerverifiedA payment qualifies as a qualified spons...View AnswerShow Answer

Match the following statements -Debt-financed income is the net income from debt financed property.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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?

Correct AnswerverifiedIf the following requirements are satisf...View AnswerShow Answer

Correct Answer
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Yes. The materiality exception...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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A payment qualifies as a qualified spons...
View Answer

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

Correct Answer
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If the following requirements are satisf...
View Answer