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Exam 14: Exempt Entities

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Question 81

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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 included in the requirements?

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 ten 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) All of the above are requirements.

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

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Question 82

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

A) True
B) False

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Question 83

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Soft,Inc.,a § 501(c)(3)organization,has been leasing a building to Polar,Inc.,a taxable entity,for 15 years.The lease terminates in the current tax year.Soft's adjusted basis for the building is $225,000.It sells the building to the Development Partnership,a taxable entity,for $440,000.Selling expenses are $14,000. a.Calculate the effect of the sale on Soft's UBTI. b.Assume instead that Development Partnership is a tax-exempt entity. Calculate the effect of the sale on Soft's UBTI.

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?

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 which is not a private foundation. e.Appropriate definition. f.Annual information return of a private foundation. -Form 990.

Debt-financed property consists of all real property of a tax-exempt organization on which there is a mortgage.

Nice,Inc.,a § 501(c)(3)organization,inherited 100% of the stock of Aggressive,Inc.,a for-profit entity,at the beginning of the year.Although Nice plans on selling the stock of Aggressive,a buyer has not yet been located.Aggressive's taxable income for the year is $900,000.Aggressive distributed a dividend of $525,000 to Nice at the beginning of December.Determine the tax consequences for the taxable income and the dividend payment: a.To Aggressive, Inc. b.To Nice, Inc.

For the unrelated business income tax to be imposed on an exempt organization,which of the following is not a factor that must be present?

Which of the following § 501(c) (3) exempt organizations is appropriately classified as a private foundation?

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 which is not a private foundation. e.Appropriate definition. f.Annual information return of a private foundation. -Form 990-PF.

Define a private foundation.

If an organization qualifies for exempt status for Federal income tax purposes,it is exempt from all Federal income taxes.

Why are some organizations exempt from Federal income tax?

Match the following tax forms. a.Return of Private Foundation. b.Application for Recognition of Exemption under § 501(c)(3). c.Return of Organization Exempt from Income Tax. d.Return of Certain Excise Taxes on Charities and Other Persons. e.Application for Recognition of Exemption under § 501(a). f.Application for Extension of Time. -Form 1023

Which of the following qualify as exempt organizations?

What are the excise taxes imposed on private foundations,and why are they imposed?

Hotel,Inc.,is a feeder organization for Museum,Inc.,an exempt organization.Hotel,Inc.,provides approximately 25% of the support needed by Museum,Inc.,to carry out its tax-exempt mission.Which of the following statements is correct?

What are the common characteristics of organizations that receive 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.