Question 1

For purposes of the unrelated business income tax (UBIT), a trade or business consists of any activity conducted for the production of income through the sale of merchandise, or from the performance of services for which profits have been earned during at least three of the five previous years.

Accepted Answer

A) True 
 B)False

Question 2

Define a private foundation.

Accepted Answer

By default, all exempt entities are priv...

Question 3

Which of the following statements is correct?

Accepted Answer

A)   A feeder organization is a division of a tax-exempt organization and it is subject to the Federal income tax.
B)   A feeder organization is a tax-exempt organization whose purpose is to provide food to underprivileged children.
C)   A feeder organization is a taxable organization whose purpose is to provide reduced cost meals to its employees that are excluded from the employee's gross income.
D)   Only a. and b. are correct.
E)   None of the above statements is correct.F) A) and E)
G) A) and D)

Question 4

For an exempt organization to be subject to the unrelated business income tax, the trade or business must not be substantially related to the exempt purpose of the organization.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements regarding intermediate sanctions is correct?

Accepted Answer

A)   Intermediate sanctions are self-assessing (i.e., calculated and paid by the taxpayer rather than being imposed by the IRS) .
B)   The excise tax is imposed on the exempt organization and on disqualified persons.
C)   Both a first-level tax and a second-level tax may apply.
D)   The corporate tax rates apply in calculating the amount of the tax liability.E) A) and C)
F) B) and D)

Question 6

To be classified as a private foundation, the exempt status of an organization can be provided under either § 501(c) (1) or § 501(c)(3).

Accepted Answer

A) True 
 B)False

Question 7

Are organizations that qualify for exempt organization status completely exempt from Federal income taxation?

Accepted Answer

No. Such organizations may be only parti...

Question 8

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 9

All exempt organizations which are subject to the unrelated business income tax must file Form 990-T (Exempt Organization Business Income Tax Return).

Accepted Answer

A) True 
 B)False

Question 10

A § 501(c)(3) organization exchanges its membership lists with another exempt organization. What are the Federal income tax consequences?

Accepted Answer

If an exempt organization conducts a tra...

Question 11

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 D)
F) None of the above

Question 12

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 13

City, Inc., an exempt organization, has included among other amounts the following in calculating net unrelated business income of $500,000.
  
The only expenses incurred associated with these items are rental expenses (which includes depreciation of $10,000) of $15,000. Calculate City, Inc.'s UBTI.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The net rental income from th...

Question 14

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 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.
-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

The answer of Match the following statements.
a. Exempt from tax...

Question 15

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

Accepted Answer

A)   Only an external support test.
B)   Only an internal support test.
C)   Both an external support test and an internal support test.
D)   An external support test, an internal support test, and a good faith test.E) None of the above
F) All of the above

Question 16

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

Accepted Answer

A)   To be subject to the UBIT, the exempt organization must conduct a trade or business, the trade or business is not substantially related to the exempt purpose of the organization, and the trade or business is regularly carried on by the organization.
B)   To be subject to the UBIT, the exempt organization must conduct a trade or business, the trade or business must be substantially related to the exempt purpose of the organization, and the trade or business must be regularly carried on by the organization.
C)   To be subject to the UBIT, the exempt organization must conduct a trade or business, the trade or business is not substantially related to the exempt purpose of the organization, and the trade or business is carried on during more than half the year.
D)   An exempt entity that conducts a business that competes with for-profit businesses automatically is subject to the UBIT.
E)   None of the above statements is correct.F) B) and D)
G) B) and E)

Question 17

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

Accepted Answer

The following exempt organizations need ...

Question 18

All of the stock of Hot Dog, Inc., a fast food franchise operating in 9 southeastern states, is owned by Welcome America, Inc., a § 501(c)(3) organization. The stock was received last year as an inheritance from Rob, the entrepreneur who founded the chain.
During the current year, Hot Dog reports profits before taxes and taxable income of $8 million. Hot Dog distributes $5 million to its parent, and it retains the balance for expansion purposes.
a. What are the tax consequences to Hot Dog and to Welcome America?
b. How would your answer in a. change if Hot Dog distributes $8 million to Welcome America, rather than $5 million?

Accepted Answer

a. Hot Dog is a feeder organization. The...

Question 19

Which of the following statements is correct?

Accepted Answer

A)   A private foundation is, in general, exempt from Federal income tax.
B)   A private foundation may be subject to certain types of Federal income tax.
C)   If a broad public support test is satisfied, an exempt organization that otherwise would be classified as a private foundation is not classified as a private foundation.
D)   Only b. and c. are correct.
E)   a., b., and c. are correct.F) A) and C)
G) B) and D)

Question 20

For each of the following taxes which are imposed on private foundations and/or Foundation Managers, match the appropriate initial tax or additional tax.
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.
-Tax on jeopardizing investments

Accepted Answer

The answer of For each of the following taxes which...

Exam 23: Exempt Entities

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
verified

Correct Answer
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a. Hot Dog is a feeder organization. The...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified
The following exempt organizations need ...
View Answer

For purposes of the unrelated business income tax (UBIT), a trade or business consists of any activity conducted for the production of income through the sale of merchandise, or from the performance of services for which profits have been earned during at least three of the five previous years.

Correct Answer
verified

For an exempt organization to be subject to the unrelated business income tax, the trade or business must not be substantially related to the exempt purpose of the organization.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

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

Correct Answer
verified

To be classified as a private foundation, the exempt status of an organization can be provided under either § 501(c) (1) or § 501(c)(3).

Correct Answer
verified

Define a private foundation.

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

Which of the following statements is correct?

Correct Answer
verified

All exempt organizations which are subject to the unrelated business income tax must file Form 990-T (Exempt Organization Business Income Tax Return).

Correct Answer
verified

Which of the following statements regarding intermediate sanctions is correct?

Correct Answer
verified

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

Correct Answer
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City, Inc., an exempt organization, has included among other amounts the following in calculating net unrelated business income of $500,000. The only expenses incurred associated with these items are rental expenses (which includes depreciation of $10,000) of $15,000. Calculate City, Inc.'s UBTI.

Correct Answer
verified
The net rental income from th...
View Answer

Are organizations that qualify for exempt organization status completely exempt from Federal income taxation?

Correct Answer
verified
No. Such organizations may be only parti...
View Answer

A § 501(c)(3) organization exchanges its membership lists with another exempt organization. What are the Federal income tax consequences?

Correct Answer
verified
If an exempt organization conducts a tra...
View 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 Answer
verified

Exam 23: Exempt Entities

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

Correct Answerverifieda. Hot Dog is a feeder organization. The...View AnswerShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe following exempt organizations need ...View AnswerShow Answer

For purposes of the unrelated business income tax (UBIT), a trade or business consists of any activity conducted for the production of income through the sale of merchandise, or from the performance of services for which profits have been earned during at least three of the five previous years.

Correct AnswerverifiedShow Answer

For an exempt organization to be subject to the unrelated business income tax, the trade or business must not be substantially related to the exempt purpose of the organization.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

To be classified as a private foundation, the exempt status of an organization can be provided under either § 501(c) (1) or § 501(c)(3).

Correct AnswerverifiedShow Answer

Define a private foundation.

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

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

All exempt organizations which are subject to the unrelated business income tax must file Form 990-T (Exempt Organization Business Income Tax Return).

Correct AnswerverifiedShow Answer

Which of the following statements regarding intermediate sanctions is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

City, Inc., an exempt organization, has included among other amounts the following in calculating net unrelated business income of $500,000. The only expenses incurred associated with these items are rental expenses (which includes depreciation of $10,000) of $15,000. Calculate City, Inc.'s UBTI.

Correct Answerverified The net rental income from th...View AnswerShow Answer

Are organizations that qualify for exempt organization status completely exempt from Federal income taxation?

Correct AnswerverifiedNo. Such organizations may be only parti...View AnswerShow Answer

A § 501(c)(3) organization exchanges its membership lists with another exempt organization. What are the Federal income tax consequences?

Correct AnswerverifiedIf an exempt organization conducts a tra...View AnswerShow 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

Correct Answer
verified

Correct Answer
verified
a. Hot Dog is a feeder organization. The...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The following exempt organizations need ...
View Answer

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The net rental income from th...
View Answer

Correct Answer
verified
No. Such organizations may be only parti...
View Answer

Correct Answer
verified
If an exempt organization conducts a tra...
View Answer

Correct Answer
verified