Question 1

Match the following statements.
-Private foundation

Accepted Answer

A)  May be subject to some Federal income taxation, and classification may adversely affect the amount of charitable contributions received.
B)  Tax imposed for engaging in transactions with disqualified persons.
C)  Tax imposed for making investments that are too risky.
D)  Tax imposed on investments that enable a private foundation to control unrelated for-profit businesses.E) A) and B)
F) A) and C)

Question 2

For each of the following taxes that are imposed on private foundations and/or foundation managers, match the appropriate initial tax or additional tax.
-Tax on excess business holdings

Accepted Answer

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.F) B) and E)
G) C) and E)

Question 3

How can an exempt organization otherwise classified as a private foundation become a public charity?

Accepted Answer

An exempt organization that otherwise wo...

Question 4

Rattler, Inc., an exempt organization, trains disabled individuals to design web pages. Rather than hold a traditional graduation exercise, the graduates compete in a web design 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 three graduates. Calculate the amount of Rattler's unrelated business income from this activity.

Accepted Answer

The contest activity is not classified a...

Question 5

Match the following statements.
-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.

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) B) and F)
H) C) and D)

Question 6

Define a qualified corporate sponsorship payment.

Accepted Answer

A payment qualifies as a qualified spons...

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

If an exempt organization conducts a trade or business that is regularly carried on by the organization when the business relates to the organization's exempt purpose, the organization is subject to the unrelated business income tax UBIT).

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Teal, Inc., is a private foundation that failed to distribute an adequate amount of income for the exempt purpose of Teal. Which of the following statements is correct?

Accepted Answer

A)   An excise tax in the form of an initial tax at the rate of 10% may be imposed on Teal.
B)   An excise tax in the form of an initial tax at the rate of 5% may be imposed on the foundation manager.
C)   An excise tax in the form of an additional tax at the rate of 100% may be imposed on Teal.
D)   An excise tax in the form of an additional tax at the rate of 50% may be imposed on the foundation manager.E) All of the above
F) None of the above

Question 11

An educational organization such as Williams College that is exempt under § 501c)3) cannot be classified as a private foundation if its only sources of revenue are from tuition and alumni contributions.

Accepted Answer

A) True 
 B)False

Question 12

Match the following tax forms.
-Form 990-PF

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) C) and D)
F) B) and C)

Question 13

Which of the following statements regarding the unrelated business income tax is not correct?

Accepted Answer

A)   Unrelated business income is income from activities not related to the exempt purpose of the organization.
B)   The unrelated business income tax is levied because the exempt organization is engaging in substantial commercial activities.
C)   If the unrelated business income tax were not levied, nonexempt organizations would be placed at a substantial disadvantage when trying to compete with the exempt organization.
D)   The tax rate that is applied to unrelated business taxable income is a flat 30% income tax rate.
E)   All of these statements are correct.F) B) and D)
G) C) and E)

Question 14

Medical, Inc., a § 501c)3) exempt organization, engages in an excess benefit transaction such that the intermediate sanctions rules may apply. The amount of the excess benefit is $50,000. For the organization management, the participation in the excess benefit transaction was not willful and was supported by reasonable cause. Calculate the amount of the excise tax first-level tax only) imposed under the intermediate sanctions provision.

Accepted Answer

Under the intermediate sanctions provisi...

Question 15

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

Accepted Answer

In addition to being exempt from Federal...

Question 16

Match the following statements.
-Bingo games

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 B)
F) None of the above

Question 17

For purposes of the unrelated business income tax UBIT) , land that is acquired by the exempt organization for later exempt use is excluded from the definition of debt-financed property if certain requirements are satisfied. Which of the following is not a requirement?

Accepted Answer

A)   The principal purpose of acquiring the land is for use substantially all)  in achieving the organization's exempt purpose.
B)   The fair market value of the land is not over 50% of the fair market value of land presently owned by the exempt organization.
C)   The use of the land by the exempt organization will begin within 10 years of the acquisition date.
D)   At the date the land is acquired, it is located in the neighborhood of other property of the organization for which substantially all the use is for achieving the organization's exempt purpose.E) B) and C)
F) All of the above

Question 18

Match the following statements.
-The trade or business consists of selling merchandise, and substantially all of the merchandise has been received as gifts or contributions to the entity.

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) A) and C)
H) D) and F)

Question 19

Theater, Inc., an exempt organization, owns a printing company, Printers, Inc., that remits 85% of its profits i.e., taxable income of $100,000) to Theater. Since Printers remits at least 85% of its profits to Theater, neither Theater, nor Printers, must pay income tax on this $85,000 $100,000 × 85%).

Accepted Answer

A) True 
 B)False

Question 20

Define a private foundation.

Accepted Answer

By default, all exempt entities are priv...

Exam 15: Exempt Entities

Match the following statements. -Bingo games

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. -Private foundation

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

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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Match the following tax forms. -Form 990-PF

Correct Answer
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Define a private foundation.

Correct Answer
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By default, all exempt entities are priv...
View Answer

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

Correct Answer
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In addition to being exempt from Federal...
View Answer

Match the following statements. -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.

Correct Answer
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An educational organization such as Williams College that is exempt under § 501c)3) cannot be classified as a private foundation if its only sources of revenue are from tuition and alumni contributions.

Correct Answer
verified

Match the following statements. -The trade or business consists of selling merchandise, and substantially all of the merchandise has been received as gifts or contributions to the entity.

Correct Answer
verified

For purposes of the unrelated business income tax UBIT) , land that is acquired by the exempt organization for later exempt use is excluded from the definition of debt-financed property if certain requirements are satisfied. Which of the following is not a requirement?

Correct Answer
verified

If an exempt organization conducts a trade or business that is regularly carried on by the organization when the business relates to the organization's exempt purpose, the organization is subject to the unrelated business income tax UBIT).

Correct Answer
verified

Teal, Inc., is a private foundation that failed to distribute an adequate amount of income for the exempt purpose of Teal. Which of the following statements is correct?

Correct Answer
verified

How can an exempt organization otherwise classified as a private foundation become a public charity?

Correct Answer
verified
An exempt organization that otherwise wo...
View Answer

Which of the following statements regarding the unrelated business income tax is not correct?

Correct Answer
verified

For each of the following taxes that are imposed on private foundations and/or foundation managers, match the appropriate initial tax or additional tax. -Tax on excess business holdings

Correct Answer
verified

Correct Answer
verified
The contest activity is not classified a...
View Answer

Correct Answer
verified
Under the intermediate sanctions provisi...
View Answer

Correct Answer
verified

Exam 15: Exempt Entities

Match the following statements. -Bingo games

Correct AnswerverifiedShow Answer

Define a qualified corporate sponsorship payment.

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

Match the following statements. -Private foundation

Correct AnswerverifiedShow Answer

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

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

Match the following tax forms. -Form 990-PF

Correct AnswerverifiedShow Answer

Define a private foundation.

Correct AnswerverifiedBy default, all exempt entities are priv...View AnswerShow Answer

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

Correct AnswerverifiedIn addition to being exempt from Federal...View AnswerShow Answer

Match the following statements. -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.

Correct AnswerverifiedShow Answer

An educational organization such as Williams College that is exempt under § 501c)3) cannot be classified as a private foundation if its only sources of revenue are from tuition and alumni contributions.

Correct AnswerverifiedShow Answer

Match the following statements. -The trade or business consists of selling merchandise, and substantially all of the merchandise has been received as gifts or contributions to the entity.

Correct AnswerverifiedShow Answer

For purposes of the unrelated business income tax UBIT) , land that is acquired by the exempt organization for later exempt use is excluded from the definition of debt-financed property if certain requirements are satisfied. Which of the following is not a requirement?

Correct AnswerverifiedShow Answer

If an exempt organization conducts a trade or business that is regularly carried on by the organization when the business relates to the organization's exempt purpose, the organization is subject to the unrelated business income tax UBIT).

Correct AnswerverifiedShow Answer

Teal, Inc., is a private foundation that failed to distribute an adequate amount of income for the exempt purpose of Teal. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

How can an exempt organization otherwise classified as a private foundation become a public charity?

Correct AnswerverifiedAn exempt organization that otherwise wo...View AnswerShow Answer

Which of the following statements regarding the unrelated business income tax is not correct?

Correct AnswerverifiedShow Answer

For each of the following taxes that are imposed on private foundations and/or foundation managers, match the appropriate initial tax or additional tax. -Tax on excess business holdings

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe contest activity is not classified a...View AnswerShow Answer

Correct AnswerverifiedUnder the intermediate sanctions provisi...View AnswerShow Answer

Correct AnswerverifiedShow Answer

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
By default, all exempt entities are priv...
View Answer

Correct Answer
verified
In addition to being exempt from Federal...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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An exempt organization that otherwise wo...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The contest activity is not classified a...
View Answer

Correct Answer
verified
Under the intermediate sanctions provisi...
View Answer

Correct Answer
verified