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Exam 15: Exempt Entities

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Question 21

Multiple Choice

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Gallery, a public charity, reports annual gross receipts of $100,000 and has total assets of $425,000. It should file an) :

A) Form 990.
B) Form 990-PF.
C) Form 990-N e-Postcard) .
D) Form 990-EZ.

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

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Question 22

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An exempt entity is not subject to any Federal income tax.

A) True
B) False

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Question 23

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What are intermediate sanctions and to what types of exempt organizations do they apply?

To satisfy the "not-for-profit" requirement for exempt status, the entity may not be engaged in a trade or business.

Spirit, Inc., a § 501c)3) organization, is classified as a private foundation. It reports investment income of $175,000. Calculate Spirit's tax on its investment income.

If an exempt organization is required to file an annual information return, on what form is it filed? Be specific.

The purpose of the excise tax imposed on a private foundation for failure to distribute sufficient levels of income is to motivate the foundation to distribute more of its income for application to exempt purposes.

If an exempt organization conducts a trade or business that consists of either exchanging or renting to other exempt organizations the organization's donor or membership list, such trade or business is an unrelated trade or business.

If an exempt organization distributes "low-cost items" as an incidental part of its solicitation for charitable contributions, the distribution is not considered an unrelated trade or business. a. Under what dollar amount is a distribution no longer a "low-cost item"? b. Provide examples of low-cost items.

Match the following statements. -Corporate sponsorship payments

Restful, Inc., a § 501c)3) exempt organization, hires a registered lobbyist to promote its position on pending legislation. For the year, its lobbying expenses are $100,000. Restful makes the § 501h) election. The lobbying nontaxable amount is $90,000. a. Will the lobbying expenses result in Restful losing its exempt status? b. Calculate the amount of any tax that Restful must pay associated with the lobbying expenses.

By default, an exempt entity is a:

A § 501c) 3) organization that otherwise would be classified as a private foundation can avoid such classification if it satisfies:

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.

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

Which of the following statements regarding intermediate sanctions is correct?

Identify the components of the tax model for unrelated business taxable income.

A church is one of the types of exempt organizations.

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

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