Theater,Inc. ,an exempt organization,owns a printing company,Printers,Inc. ,which remits 80% of its profits to Theater,Inc.Since Printers remits at least 80% of its profits to Theater,neither Theater,Inc. ,nor Printers,Inc. ,must pay income tax on this $80,000 ($100,000 * 80%).

Question

Quizplus · Accepted Answer

Exempt organizations may still be subject to tax on unrelated business income, and owning a for-profit entity like Printers, Inc. could generate taxable income for Theater, Inc.