Question 1

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.

Accepted Answer

Unrelated debt-financed income, net of the unrelated debt-financed deductions, is subject to the unrelated business income tax for all exempt organizations, not just private foundations.

Question 2

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.

Accepted Answer

A stock exchange is not considered an exempt organization under the tax code. Religious, charitable, educational, labor, agricultural, and horticultural organizations, as well as voluntary employees' beneficiary associations, can all qualify for tax-exempt status.

Question 3

The due date for both Form 990 (Return of Organization Exempt from Income Tax)and Form 990-PF (Return of Private Foundation)is the fifteenth day of the fifth month after the end of the taxable year.

Accepted Answer

This is true according to the IRS. The due date for both Form 990 and Form 990-PF is the fifteenth day of the fifth month after the end of the taxable year. For example, if the taxable year ends on December 31st, the due date would be May 15th of the following year.

Question 4

Which of the following are available options for the IRS in dealing with an exempt organization entering into prohibited transactions?
A)Attempt to subject all or part of the organization's income to Federal income tax.
B)Revoke the exempt status of the organization.
C)Impose intermediate sanctions in the form of excise taxes.
D)Only a.and b.
E)a. ,b. ,and c.

Accepted Answer

The IRS has three available options in dealing with an exempt organization entering prohibited transactions. These are attempting to subject all or part of the organization's income to Federal income tax, revoking the exempt status of the organization, and imposing intermediate sanctions in the form of excise taxes. Therefore, the correct choice is E, which includes all three options.

Question 5

Which of the following qualify as exempt organizations?
A)Federal and related agencies.
B)Religious,charitable,and educational organizations.
C)Civic leagues.
D)Social clubs.
E)All of the above can be exempt from tax.

Accepted Answer

All of the listed options (federal and related agencies, religious, charitable, and educational organizations, civic leagues, and social clubs) can qualify for tax-exempt status. However, there may be specific criteria and requirements that must be met in order to qualify for exemption.

Question 6

Which of the following is a requirement for exempt status?
A)The organization does not exert political influence.
B)The organization has not been subject to intermediate sanctions for the past 18 months.
C)The organization serves some type of common good.
D)Only a.and c.
E)a. ,b. ,and c.

Accepted Answer

Exempt status requires that the organization serves some type of common good and does not exert political influence. There is no requirement related to intermediate sanctions for the past 18 months.

Question 7

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

Accepted Answer

The answer of If the unrelated business income of an...

Question 8

A church is not required to obtain IRS approval for its exempt status.

Accepted Answer

According to the IRS, churches are automatically considered tax-exempt and are not required to apply for or obtain IRS approval for their exempt status.

Question 9

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

Accepted Answer

The answer of Debt-financed property consists of all real property...

Question 10

Even though a church is not required to obtain IRS approval of its exempt status,it still must file Form 990 (Return of Organization Exempt from Income Tax)annually.

Accepted Answer

Churches are generally exempt from filing the Form 990, unless they have unrelated business income exceeding $1,000 or if they are a non-church religious organization.

Question 11

If personal property is leased with real property and more than 50% of the rent income under the lease is from personal property,all of the rent income is subject to the unrelated business income tax.

Accepted Answer

According to the IRS, if personal property is leased with real property and more than 50% of the rent income under the lease is from personal property, all of the rent income is subject to the unrelated business income tax.

Question 12

Which of the following are organizations exempt under § 501(c)(3)?
A)Girl Scouts of America.
B)Washington and Lee University.
C)League of Women Voters.
D)Only a.and b.are § 501(c)(3)organizations.
E)All of the above are § 501(c)(3)organizations.

Accepted Answer

The Girl Scouts of America and Washington and Lee University are both organizations that fall under § 501(c)(3), as charitable organizations and educational institutions respectively. The League of Women Voters is a § 501(c)(4) organization, which is classified as a social welfare organization with a different tax-exempt purpose. Therefore, only choices A and B are § 501(c)(3) organizations.

Question 13

Unless the "widely available" provision is satisfied,a § 501(c)(3)exempt organization (excluding churches and private foundations)must make copies of the following available to the general public: Form 990 (Return of Organization Exempt from Income Tax)and Form 1023 [Application for Recognition of Exemption under § 501(c)(3)] or Form 1024 [Application for Recognition of Exemption under § 501(a)].

Accepted Answer

Unless the organization satisfies the "widely available" provision, it must make copies of Form 990 and either Form 1023 or Form 1024 available to the general public for inspection and copying.

Question 14

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

The answer of All exempt organizations which are subject to...

Question 15

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?
A)Only Museum,Inc. ,is subject to Federal income taxation.
B)Both Museum,Inc. ,and Hotel,Inc. ,are subject to Federal income taxation.
C)Hotel,Inc. ,is subject to Federal income taxation on all of its income and Museum,Inc. ,is subject to Federal income taxation on 25% of its income.
D)Only Hotel,Inc. ,is subject to Federal income taxation.
E)None of the statements is correct.

Accepted Answer

Hotel, Inc., as a feeder organization, is subject to federal income taxation because it provides support to Museum, Inc., which is an exempt organization. Museum, Inc., being an exempt organization, is not subject to federal income taxation on its income related to its tax-exempt mission.

Question 16

Personal property rental income is subject to and real property rental income is not subject to the unrelated business income tax.

Accepted Answer

Real property rental income can be subject to the unrelated business income tax if it is earned by a tax exempt organization using debt financing or if the property is leased with certain services or facilities. Personal property rental income, such as from equipment or vehicles, can also be exempt from the tax if certain conditions are met.

Question 17

Which of the following statements regarding intermediate sanctions is correct?
A)Intermediate sanctions are self-assessing (i.e. ,calculated and paid by the taxpayer rather than being imposed by the IRS).
B)The tax is imposed on the exempt organization.
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)None of the above is correct.

Accepted Answer

Intermediate sanctions can potentially result in both a first-level tax (imposed on the person responsible for excess benefit transaction) and a second-level tax (imposed on the organization if the initial tax is not corrected). Option A is incorrect because intermediate sanctions are imposed by the IRS, not self-assessing. Option B is incorrect because the tax is imposed on the person responsible for the excess benefit transaction, not the exempt organization. Option D is incorrect because intermediate sanctions are not subject to corporate tax rates.

Question 18

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:
A)$0.
B)$7,250.
C)$11,250.
D)$36,250.
E)Some other amount.

Accepted Answer

The answer of Rose,Inc. ,a qualifying § 501(c)(3)organization,incurs lobbying expenditures...

Question 19

Which of the following are exempt organizations?
A)National Collegiate Athletic Association (NCAA).
B)American Bankers Association (ABA).
C)Professional Golfers Association (PGA).
D)Only a.and c.
E)a. ,b. ,and c.

Accepted Answer

The NCAA, ABA, and PGA are all considered exempt organizations under the Internal Revenue Code, as they are organized for purposes such as education, professional development, and sports promotion.

Question 20

Which of the following statements is correct?
A)Exempt organizations cannot engage in significant levels of lobbying activities.
B)Certain exempt organizations can elect to engage in lobbying activities on a limited basis.
C)Churches can engage in lobbying activities on an unlimited basis because of the separation of church and state provision.
D)Only a.and b.are correct.
E)Only a.and c.are correct.

Accepted Answer

Exempt organizations can elect to engage in lobbying activities on a limited basis, and churches can engage in lobbying activities on an unlimited basis because of the separation of church and state provision.

Quiz 23: Exempt Entities

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.

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

The due date for both Form 990 (Return of Organization Exempt from Income Tax)and Form 990-PF (Return of Private Foundation)is the fifteenth day of the fifth month after the end of the taxable year.

Which of the following are available options for the IRS in dealing with an exempt organization entering into prohibited transactions?

Which of the following qualify as exempt organizations?

Which of the following is a requirement for exempt status?

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

A church is not required to obtain IRS approval for its exempt status.

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

Even though a church is not required to obtain IRS approval of its exempt status,it still must file Form 990 (Return of Organization Exempt from Income Tax)annually.

If personal property is leased with real property and more than 50% of the rent income under the lease is from personal property,all of the rent income is subject to the unrelated business income tax.

Which of the following are organizations exempt under § 501(c) (3) ?

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

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?

Personal property rental income is subject to and real property rental income is not subject to the unrelated business income tax.

Which of the following statements regarding intermediate sanctions is correct?

Which of the following are exempt organizations?

Which of the following statements is correct?