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

A) True
B) False

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Woeful,Inc. ,a tax-exempt organization,leases a building and machinery to Purple Partnership.The rental income from the building is $180,000,with related expenses of $70,000.The rental income from the machinery is $12,000,with related expenses of $3,000.What adjustment must be made to net unrelated business income?

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The net rental income of $119,000 ($110,...

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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?


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

F) B) and E)
G) A) and E)

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Which of the following taxes that are imposed on private foundations is,effectively,an audit fee to defray IRS expenses?


A) Tax on self-dealing.
B) Tax on failure to distribute income.
C) Tax on excess business holdings.
D) Only a.and c.
E) None of the above.

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

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To maintain exempt status,an organization must do which of the following:


A) Satisfy only an organizational test.
B) Satisfy only an operational test.
C) Satisfy both an organizational test and an operational test.
D) Satisfy a financial test.
E) Once exempt status is granted,it will continue regardless of whether the organizational test and the operational test are satisfied.

F) B) and D)
G) All of the above

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What is the purpose of the unrelated business income tax?

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The unrelated business income tax is des...

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Wonder,Inc. ,a private foundation,makes a speculative investment of $800,000 that puts the foundation assets at risk.Calculate the tax on jeopardizing investments.Assume that corrective action is taken so that the additional tax does not apply.

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The initial tax on the private...

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An exempt organization that is eligible to elect under § 501(h)to engage in lobbying activities on a limited basis incurs no tax liability from lobbying,if the lobbying expenditures for the tax year do not exceed the lobbying expenditures ceiling.

A) True
B) False

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


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.

F) A) and D)
G) None of the above

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A church is one of the types of exempt organizations.

A) True
B) False

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Define "trade or business" for purposes of the unrelated business income tax (UBIT).

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Trade or business,for purposes of the UB...

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One of the requirements for an exempt organization being classified as an unrelated trade or business is the "not substantially related" requirement.That is,the trade or business is not substantially related to the exempt purpose of the organization.How can an exempt organization avoid satisfying this requirement?

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To avoid satisfying this requirement,the...

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


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.all are correct.

F) A) and D)
G) A) and C)

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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.

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The contest activity is not classified a...

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


A) Churches are required to file Form 990 (Return of Organization Exempt from Income Tax) only if its annual gross receipts exceed $50,000.
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) Exempt organizations whose annual gross receipts do not exceed $50,000 can file an e-Postcard.
D) Only a.and b.are incorrect.
E) a. ,b. ,and c.are incorrect.

F) A) and D)
G) D) and E)

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Which of the following statements is correct?


A) For an exempt organization not to be classified as a private foundation under the broadly supported provision,both the external support test and the internal support test must be satisfied.
B) For an exempt organization not to be classified as a private foundation under the broadly supported provision,both the external support test and the internal support test must be failed.
C) For an exempt organization not to be classified as a private foundation under the broadly supported provision,the external support test must be satisfied and the internal support test must be failed.
D) For an exempt organization not to be classified as a private foundation under the broadly supported provision,the external support test must be failed and the internal support test must be passed.
E) None of the above statements is correct.

F) B) and C)
G) D) and E)

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Midge is the chairman of the board for a § 501(c)(3)exempt organization.She would like the exempt organization to be able to avoid private foundation classification status.Describe how this can be achieved.

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An exempt organization that otherwise wo...

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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.

A) True
B) False

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


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) None of the above
G) A) and E)

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Spirit,Inc. ,a § 501(c)(3)organization,is classified as a private foundation.It has investment income of $150,000.Calculate Spirit's tax on its investment income.

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Spirit's tax on its ...

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