Question 1

While the major objective of the Federal income tax law is to raise revenue, social considerations and economic objectives also affect the tax law.

Accepted Answer

A) True 
 B)False

Question 2

Pearl Inc., a tax-exempt organization, leases land, building, and machinery to Purple Partnership for a 5-year period.
The rental income from the land and building is $100,000, with related expenses of $40,000. The rental income from the machinery is $9,000 with related expenses of $3,000. What adjustment must be made in computing net unrelated business income?

Accepted Answer

The net rental income of $66,000 $60,000...

Question 3

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 4

Even though a church is not required to obtain IRS approval of its exempt status, it still must annually file a Form
990.

Accepted Answer

A) True 
 B)False

Question 5

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.G) C) and D)
H) A) and C)

Question 6

Match the following tax forms.
-Form 1024

Accepted Answer

A)  Return of Private Foundation.
B)  Application for Recognition of Exemption under § 501c) 3) .
C)  Return of Organization Exempt from Income Tax.
D)  Application for Recognition of Exemption under § 501a) .E) A) and C)
F) A) and D)

Question 7

Plus Inc. is a § 501c)3) organization. It generates a small amount of net income each year. Ralph, the CEO of Plus is concerned that Plus may be subject to the unrelated business income tax. Is there a materiality exception to this tax?

Accepted Answer

Yes. The materiality exception...

Question 8

Matching
Give an example of the indicated types of exempt organizations.
-§ 501c) 3)  organization

Accepted Answer

A)  League of Women Voters.
B)  Teachers' association.
C)  American Plywood Association.
D)  Six Flags over Texas theme park.
E)  Salvation Army.F) B) and E)
G) C) and D)

Question 9

Ballet's lobbying nontaxable amount is $600,000. Its lobbying expenditures ceiling is:

Accepted Answer

A)   $0.
B)   $150,000.
C)   $600,000.
D)   $900,000.E) A) and B)
F) B) and D)

Question 10

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 exists.E) None of the above
F) A) and B)

Question 11

Miracle, Inc., is a § 501c)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 § 501h) 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 12

Chorus reports $20,000 of sales of pizzas at the local high school ballgames this year. Related expenses total $6,000. UBTI equals:

Accepted Answer

A)   $-0-.
B)   $13,000.
C)   $14,000.
D)   $20,000.E) A) and B)
F) None of the above

Question 13

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 14

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

Accepted Answer

A)   Private foundations are subject to the unrelated business income tax.
B)   Bingo games are not subject to the unrelated business income tax if they are conducted by an exempt organization.
C)   The exchange or rental of membership lists with other exempt and nonexempt organizations is not an unrelated trade or business.
D)   All of these statements are correct.
E)   None of these statements is correct.F) A) and C)
G) B) and C)

Question 15

Matching
Give an example of the indicated types of exempt organizations.
-§ 501c) 5)  labor organization

Accepted Answer

A)  League of Women Voters.
B)  Teachers' association.
C)  American Plywood Association.
D)  Six Flags over Texas theme park.
E)  Salvation Army.F) A) and B)
G) A) and C)

Question 16

Blue, Inc., receives its support from the following sources. Governmental unit A for services rendered $18,000
General public for services rendered 25,000
Gross investment income 8,000
Contributions from individual disqualified persons 19,000
Which of the following statements is correct?

Accepted Answer

A)   Blue is a private foundation because it satisfies the external support test and fails the internal support test.
B)   Blue is not a private foundation because it fails both the internal and external support tests.
C)   Blue is a private foundation because it satisfies both the external support test and the internal support test.
D)   Blue is not a private foundation because it satisfies both the external support test and the internal support test.E) A) and C)
F) B) and C)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Match the following tax forms.
-Form 1023

Accepted Answer

A)  Return of Private Foundation.
B)  Application for Recognition of Exemption under § 501c) 3) .
C)  Return of Organization Exempt from Income Tax.
D)  Application for Recognition of Exemption under § 501a) .E) A) and B)
F) A) and C)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Match the following statements.
-Membership lists

Accepted Answer

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 notan unrelated trade or business.E) A) and C)
F) A) and B)

Exam 15: Exempt Entities

Blue, Inc., receives its support from the following sources. Governmental unit A for services rendered $18,000 General public for services rendered 25,000 Gross investment income 8,000 Contributions from individual disqualified persons 19,000 Which of the following statements is correct?

Correct Answer
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Even though a church is not required to obtain IRS approval of its exempt status, it still must annually file a Form 990.

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

Correct Answer
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Match the following tax forms. -Form 1023

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

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

Correct Answer
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Plus Inc. is a § 501c)3) organization. It generates a small amount of net income each year. Ralph, the CEO of Plus is concerned that Plus may be subject to the unrelated business income tax. Is there a materiality exception to this tax?

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

Ballet's lobbying nontaxable amount is $600,000. Its lobbying expenditures ceiling is:

Correct Answer
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Match the following tax forms. -Form 1024

Correct Answer
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Matching Give an example of the indicated types of exempt organizations. -§ 501c) 5) labor organization

Correct Answer
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Chorus reports $20,000 of sales of pizzas at the local high school ballgames this year. Related expenses total $6,000. UBTI equals:

Correct Answer
verified

Correct Answer
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The net rental income of $66,000 $60,000...
View Answer

Match the following statements. -Membership lists

Correct Answer
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While the major objective of the Federal income tax law is to raise revenue, social considerations and economic objectives also affect the tax law.

Correct Answer
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The Form 990-N:

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

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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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
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Matching Give an example of the indicated types of exempt organizations. -§ 501c) 3) organization

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

Exam 15: Exempt Entities

Blue, Inc., receives its support from the following sources. Governmental unit A for services rendered $18,000 General public for services rendered 25,000 Gross investment income 8,000 Contributions from individual disqualified persons 19,000 Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Even though a church is not required to obtain IRS approval of its exempt status, it still must annually file a Form 990.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Match the following tax forms. -Form 1023

Correct AnswerverifiedShow 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

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

Correct AnswerverifiedShow Answer

Plus Inc. is a § 501c)3) organization. It generates a small amount of net income each year. Ralph, the CEO of Plus is concerned that Plus may be subject to the unrelated business income tax. Is there a materiality exception to this tax?

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

Ballet's lobbying nontaxable amount is $600,000. Its lobbying expenditures ceiling is:

Correct AnswerverifiedShow Answer

Match the following tax forms. -Form 1024

Correct AnswerverifiedShow Answer

Matching Give an example of the indicated types of exempt organizations. -§ 501c) 5) labor organization

Correct AnswerverifiedShow Answer

Chorus reports $20,000 of sales of pizzas at the local high school ballgames this year. Related expenses total $6,000. UBTI equals:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe net rental income of $66,000 $60,000...View AnswerShow Answer

Match the following statements. -Membership lists

Correct AnswerverifiedShow Answer

While the major objective of the Federal income tax law is to raise revenue, social considerations and economic objectives also affect the tax law.

Correct AnswerverifiedShow Answer

The Form 990-N:

Correct AnswerverifiedShow Answer

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

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

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

Matching Give an example of the indicated types of exempt organizations. -§ 501c) 3) organization

Correct AnswerverifiedShow Answer

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

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If the following requirements are satisf...
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Yes. The materiality exception...
View Answer

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The net rental income of $66,000 $60,000...
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Since Miracle's lobbying expenses of $11...
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