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Exam 15: Exempt Entities

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Question 21

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

A) Religious,charitable,or educational organization.
B) Voluntary employees' beneficiary association.
C) Labor,agricultural,or horticultural organization.
D) Stock exchange.
E) All of the above can be exempt from tax.

F) B) and C)
G) A) and B)

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Question 22

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Which of the following types of § 501(c) (3) organizations are not private foundations?

A) Hospitals.
B) Churches.
C) Colleges and universities.
D) Only a.and b.
E) a. ,b. ,and c.

F) A) and E)
G) B) and C)

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Question 23

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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:

Loyal,Inc. ,is a §501(c)(3)organization that is not classified as a private foundation.During the current year,it is subject to intermediate sanctions.What other options does the IRS have in dealing with an exempt organization engaging in prohibited transactions?

Which of the following statements are correct?

If an exempt organization is subject to intermediate sanctions,it forfeits its exempt status.

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 60 volunteers and the museum is operated by 10 employees.Revenue by source is: Determine the amount of First Americans' unrelated business income.

A trade or business that is operated by an exempt organization which otherwise would be subject to the tax on unrelated business income is exempt from tax,if the profits generated by the trade or business are used by the exempt organization for exempt purposes.

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?

Qualified state tuition programs are exempt from Federal income tax under § 501(c)(3).

Which of the following is one of the requirements that will enable mortgaged land acquired by an exempt organization for later exempt use to be excluded from debt-financed property,for purposes of the unrelated business income tax?

Unrelated debt-financed income,net of the unrelated debt-financed deductions,is subject to the unrelated business income tax only if the exempt organization is a private foundation.

What is the purpose of the unrelated business income tax?

Arbor,Inc. ,an exempt organization,leases land,building,and machinery to a tenant for a 5-year period.The rent income for the land and building is $400,000 per year and that from the related machinery is $80,000 per year.Expenses incurred by Arbor for the land and building during the year are $60,000 and those for the machinery are $36,000.Net unrelated business income,which includes the above rental income and expenses,is $800,000.Calculate Arbor's unrelated business taxable income.

Which exempt organizations are not required to file an annual Federal tax return?

Rose,Inc. ,a qualifying § 501(c) (3) organization,incurs lobbying expenditures of $145,000 during the taxable year.Exempt purpose expenditures are $500,000.If Rose makes the election under § 501(h) to make lobbying expenditures on a limited basis,its tax liability resulting from the lobbying expenditures is:

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

Private foundations are permitted to engage in lobbying activities.

Revenue generated by an exempt organization from the distribution of low-cost items is not income from an unrelated trade or business.

What tax forms are used to apply for exempt status?