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Exam 15: Exempt Entities

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Question 21

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If an exempt organization conducts a trade or business that is regularly carried on by the organization, it is subject to the unrelated business income tax (UBIT).

A) True
B) False

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Question 22

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Which of the following is one of the requirements that will enable mortgaged land acquired by an exempt organization for later exempt use to be excluded from debt-financed property, for purposes of the unrelated business income tax?

A) The principal purpose of acquiring the land is for investment.
B) The land is used within ten years of the acquisition date in the organization's exempt purpose.
C) The land is located in the United States.
D) Only a. and b.
E) None of the above.

F) All of the above
G) A) and B)

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Question 23

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A church is required to obtain IRS approval for its exempt status if its annual gross receipts exceed $25,000.

A feeder organization is exempt from Federal income taxation because it carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt entity.

Federal agencies exempt from Federal income tax under § 501(c)(1) are not subject to the unrelated business income tax (UBIT).

Which of the following are consequences of tax-exempt status?

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

Midnight Basketball, Inc., an exempt organization that organizes and conducts basketball games for youths ages 10-13, receives a $50,000 contribution from Brown Shoe Company. Midnight agrees to put Brown's logo on the cover of its monthly newsletter.

Which of the following are exempt organizations to which contributions made are eligible for the charitable contribution deduction?

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:

The excise tax imposed on private foundations for excess business holdings is imposed on investments that enable the private foundation to control publicly-held rather than privately-held businesses.

The income from a bingo game conducted by an exempt organization may be unrelated business income.

One of the requirements for an exempt organization being classified as an unrelated trade or business is the "not substantially related" requirement. That is, the trade or business is not substantially related to the exempt purpose of the organization. How can an exempt organization avoid satisfying this requirement?

Which of the following requirements must be satisfied for a bingo game to be classified as not being an unrelated trade or business?

Help, Inc., a tax-exempt organization, incurs lobbying expenses of $275,000 during the tax year. Help is eligible for and makes the § 501(h) lobbying expenditure election. During the year, Help spends $1,200,000 carrying out its exempt mission.

What tax forms are used to apply for exempt status?

An intermediate sanction imposed by the IRS on an exempt organization is a lesser sanction than revocation of exempt status.

Warmth, Inc., a private foundation, makes an expenditure of $800,000 that should not be made by a private foundation. Calculate the tax on taxable expenditures. Assume that corrective action is taken so that the additional tax does not apply.

Define a qualified corporate sponsorship payment.

If an exempt organization owns a feeder organization, the exempt organization is not taxed on the profits of the feeder organization under the unrelated business income tax (UBIT) rules.