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Exam 23: Exempt Entities

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Question 21

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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.The taxes are not imposed on exempt organizations classified as public charities.

A) True
B) False

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Question 22

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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. a.10% initial tax and 25% additional tax on private foundation. b.30% initial tax and 100% additional tax on private foundation. c.10% initial tax and 200% additional tax on private foundation. d.10% initial tax and 100% additional tax on disqualified person. e.​10% initial tax and 200% additional tax on the disqualified person. -Tax on excess business holdings

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Question 23

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Certain § 501(c)(3) exempt organizations are permitted to engage in lobbying activities in the same manner as a C corporation.

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.

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

The League of Women Voters is a § 501(c)(3) organization.

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.

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

Midnight Basketball,Inc.,an exempt organization that organizes and conducts basketball games for youths ages 10-13,receives a $20,000 contribution from Brown Shoe Company.Midnight agrees to put Brown's logo on the cover of its monthly newsletter. a.Is the contribution unrelated business income to Midnight? b.Assume that instead of putting Brown's logo on the cover of its newsletter, Midnight agrees to include a statement in the newsletter that youth playing in the games conducted by Midnight wear only shoes manufactured by Brown. Is the contribution unrelated business income to Midnight? b. change if the amount of the payment was $7,500 instead of $20,000? c.Would your answer in

If personal property is leased with real property and more than 45% of the rent income under the lease is from personal property,all of the rent income is subject to the unrelated business income tax.

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

Match the following statements. a.Distribution of such items is not considered an unrelated trade or business if they are "low-cost items". b.Is considered an unrelated trade or business if the amount received is contingent upon the level of attendance at one or more events c.Is considered an unrelated trade or business if legally it can be conducted by commercial (for-profit) entities. d.A trade or business that consists of either renting or exchanging these with another exempt organization is not an unrelated trade or business. -Membership lists

General requirements for exempt status include the organization serving the common good and the organization being a not-for-profit entity.

If the unrelated business income of an exempt organization is $25,000 or less,the unrelated business income tax (UBIT) is $0.

Match the following statements. 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. -Form 990-PF.

Give an example of the indicated types of exempt organizations. a.League of Women Voters. b.Teachers' association. c.American Plywood Association. d.Six Flags over Texas theme park. e.Salvation Army. -§ 501(c)(3) organization

Match the following statements. 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. -Unrelated business income is generally that derived from the unrelated trade or business,reduced by the deductions directly connected with the conduct of the unrelated trade or business.

Which of the following statements regarding intermediate sanctions is correct?

Certain § 501(c)(3) exempt organizations are permitted to engage in lobbying activities on a limited basis.Churches are allowed to make this election.

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