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Exam 23: Exempt Entities

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Question 31

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Medical,Inc. ,a § 501(c)(3) exempt organization,engages in an excess benefit transaction.The amount of the excess benefit is $50,000.For the organization management,the participation in the excess benefit transaction was not willful and was due to reasonable cause.Calculate the amount of the excise tax (first-level tax) imposed under the intermediate sanctions provision.

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Question 32

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Under what circumstances are bingo games not treated as an unrelated trade or business?

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A bingo game is not an unrelated trade o...

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Question 33

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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 two of the five previous years.

The trade or business of selling merchandise where substantially all of the merchandise has been received as contributions or gifts is not subject to the unrelated business income tax.

Match the following statements. a.Distribution of such items is not considered an unrelated trade or business if they are "low-cost items".b.Is considered an unrelated trade or business if the amount received is contingent upon the level of attendance at one or more events, broadcast ratings, or other factors indicating the degree of public exposure to one or more events.c.Is considered an unrelated trade or business if can be conducted by commercial (for-profit) entities.d.A trade or business that consists of either renting or exchanging these with another exempt organization is not an unrelated trade or business. -Bingo games

What are the excise taxes imposed on private foundations,and why are they imposed?

For purposes of the unrelated business income tax (UBIT) ,land that is acquired by the exempt organization for later exempt-use is excluded from the definition of debt-financed property if certain requirements are satisfied.Which of the following is not included in the requirements?

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 and are not imposed on exempt organizations classified as public charities.

Give an example of the indicated types of exempt organizations. a.League of Women Voters.b.Teachers' association.c.American Plywood Association.d.Six Flags over Texas theme park.e.Salvation Army. -Not an exempt organization

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 is correct regarding the unrelated business income tax (UBIT) ?

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

Hope,Inc. ,an exempt organization,owns a factory building that it leases to a taxable corporation for $100,000 per year.Related expenses for Hope are $30,000.Hope's average acquisition indebtedness on the building is $400,000 and the average adjusted basis is $600,000.Calculate Hope's unrelated debt-financed income and expenses.Then indicate the effect of these items on unrelated business taxable income.

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

Why are some organizations exempt from Federal income tax?

What are the common characteristics of organizations that receive exempt status?

How can an exempt organization,otherwise classified as a private foundation,become a public charity?

Define "trade or business" for purposes of the unrelated business income tax (UBIT).

Even though a church is not required to obtain IRS approval of its exempt status,it still annually must file a Form 990.

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.