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Exam 23: Exempt Entities

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Question 1

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Which of the following statements are correct?

A) If an exempt organization has annual gross receipts of less than $50,000, it files an e-Postcard (Form 990-N) .
B) Private foundations must file Form 990-PF (Return of Private Foundation) .
C) An exempt organization with less than $250,000 in gross receipts may file a Form 990-EZ.
D) Only a.and b.are correct.
E) a., b., and c.all are correct.

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

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Question 2

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Warmth, Inc., a private foundation, makes an expenditure of $800,000 that should not be made by a private foundation.Calculate the tax on taxable expenditures.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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Question 3

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The activity of exchanging with or renting to other exempt organizations the exempt organization's donor or membership list is not an unrelated trade or business.

For an activity to be considered as regularly carried on for purposes of the unrelated business income tax, the activity must be conducted during the work week (i.e., activities performed on the weekend are not considered in determining if the activity is regularly carried on).

Watch, Inc., a § 501(c)(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 $9.00 per potential donor.What is the effect of the inclusion of the address labels on Watch's unrelated business income?

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)].

The excise taxes such as the tax on self-dealing and the tax on excess business holdings are imposed on exempt organizations classified as private foundations and are not imposed on exempt organizations classified as public charities.

Match the following tax forms.

Which of the following statements is/are correct with respect to the unrelated business income tax (UBIT) ?

If the unrelated business income of an exempt organization is $20,000 or less, the unrelated business income tax (UBIT) will be $0.

First Americans, Inc., a § 501(c)(3) organization, operates a museum which depicts the lives of a tribe of Native Americans. It charges an admission fee, but also finances its operations through endowment income, contributions, and gift shop sales. The gift shop is operated by 50 volunteers and the museum is operated by 15 employees. Revenue by source is:

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

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.

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

Which of the following are consequences of tax-exempt status?

The excise tax that is imposed on private foundations for making jeopardizing investments is imposed because the foundation has made speculative investments that put the foundation's income at risk.

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

The key factors in determining whether an exempt entity's income from a bingo game is unrelated trade or business income are whether substantially all the work is performed by volunteers and all of the prizes to be awarded are received as donations.

Which of the following activities, whose proceeds benefit an exempt organization, are subject to the feeder organization rules?

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.