Question 1

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 debt­financed income and expenses. Then indicate the effect of these items on unrelated business taxable income.

Accepted Answer

The income from the factory building is ...

Question 2

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

A) True 
 B)False

Question 3

Which of the following excise taxes are imposed on private foundations?

Accepted Answer

A)   Tax on failure to distribute income.
B)   Tax on excess business holdings.
C)   Tax on excess charitable contributions.
D)   Only a. and b.
E)   a., b., and c.F) None of the above
G) A) and B)

Question 4

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

Accepted Answer

A)   Private foundations are subject to the unrelated business income tax.
B)   Bingo games are not subject to the unrelated business income tax if they are conducted by an exempt organization.
C)   The exchange or rental of membership lists with other exempt and nonexempt organizations is not an unrelated trade or business.
D)   All of the above statements are correct.
E)   None of the above statements is correct.F) B) and D)
G) C) and E)

Question 5

Faith Church, a § 501(c)(3) organization, operates a bingo game two times each week to raise money to support the youth activities of the church. For the current year, net proceeds from the bingo game are $900,000.
a. Determine the tax consequences for Faith Church if the bingo game is conducted in a state where for-profit bingo games are illegal, and where the bingo game is legal for exempt entities.
b. Determine the tax consequences for Faith Church if the bingo game is conducted in a state and locality where bingo games are legal for both for-profit and exempt entities.

Accepted Answer

a. In this case, the $900,000 is exempt ...

Question 6

Give an example of the indicated types of exempt organizations.

-§ 501(c) (4)  civic league

Accepted Answer

A)  	League of Women Voters.
B)  	Teachers’ association.
C)  	American Plywood Association.
D)  	Six Flags over Texas theme park.
E)  	Salvation Army.F) C) and D)
G) B) and E)

Question 7

Which of the following statements is incorrect?

Accepted Answer

A)   No exempt organizations can engage in any 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 b. and c. are incorrect.
E)   Only a. and c. are incorrect.F) A) and E)
G) C) and E)

Question 8

For an activity to be considered as regularly carried on for purposes of the unrelated business income tax, the activity must be conducted during the work week (i.e., activities performed on the weekend are not considered in determining if the activity is regularly carried on).

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements are correct?

Accepted Answer

A)   If an exempt organization has annual gross receipts of less than $50,000, it files Form 990-N.
B)   Private foundations must file Form 990-PF (Return of Private Foundation) .
C)   An exempt organization with less than $250,000 in gross receipts may file a Form 990-EZ.
D)   Only a. and b. are correct.
E)   a., b., and c. all are correct.F) C) and E)
G) B) and C)

Question 10

Which of the following statements is correct?

Accepted Answer

A)   A feeder organization is a division of a tax-exempt organization and it is not 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) C) and D)
G) B) and D)

Question 11

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) C) and D)
G) A) and E)

Question 12

Match the following statements.

-§ 501(h)  election

Accepted Answer

A)  	Carries on a trade or business for the benefit of an exempt organization, remits its profits to the exempt organization, and is not exempt from Federal income tax.
B)  	May be subject to some Federal income taxation and classification may adversely affect amount of charitable contributions received.
C)  	Tax imposed for engaging in transactions with disqualified persons.
D)  	Enables certain exempt organizations to engage in lobbying activities on a limited basis.
E)  	Tax imposed on investments that enable a private foundation to control unrelated businesses.F) B) and E)
G) A) and B)

Question 13

Match the following statements.

-Branded calendars

Accepted Answer

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.E) All of the above
F) None of the above

Question 14

An educational organization such as the College of William and Mary that is exempt under § 501(c)(3) cannot be classified as a private foundation if its only sources of revenue are from tuition and alumni contributions.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following qualify as exempt organizations?

Accepted Answer

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.F) C) and E)
G) B) and C)

Question 16

Discuss any negative tax consequences that result from an exempt organization being classified as a private foundation.

Accepted Answer

Two potential negative tax consequences ...

Question 17

First Americans, Inc., a § 501(c)(3) organization, operates a museum which depicts the lives of a tribe of Native Americans. It charges an admission fee, but also finances its operations through endowment income, contributions, and gift shop sales. The gift shop is operated by 50 volunteers and the museum is operated by 15 employees. Revenue by source is:
  
a. Determine the amount of First Americans' unrelated business income.
b. Determine the amount of First American's unrelated business income tax (UBIT).

Accepted Answer

a. The only potential source of unrelate...

Question 18

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, but is subject to the tax on feeder organizations.

Accepted Answer

A) True 
 B)False

Question 19

A church is one of the types of exempt organizations.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following activities is not subject to the feeder organization rules?

Accepted Answer

A)   At least 80% of the net income of the for-profit entity is contributed to the exempt organization for a consecutive three-year period.
B)   A trade or business where substantially all the work is performed by volunteers.
C)   A trade or business of selling merchandise where substantially all of the merchandise has been received as contributions or gifts.
D)   Only b. and c.
E)   a., b., and c.F) A) and B)
G) C) and D)

Exam 15: Exempt Entities

Match the following statements. -Branded calendars

Correct Answer
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Which of the following activities is not subject to the feeder organization rules?

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

Correct Answer
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Which of the following excise taxes are imposed on private foundations?

Correct Answer
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For an activity to be considered as regularly carried on for purposes of the unrelated business income tax, the activity must be conducted during the work week (i.e., activities performed on the weekend are not considered in determining if the activity is regularly carried on).

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Which of the following qualify as exempt organizations?

Correct Answer
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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, but is subject to the tax on feeder organizations.

Correct Answer
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Give an example of the indicated types of exempt organizations. -§ 501(c) (4) civic league

Correct Answer
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Which of the following statements is incorrect?

Correct Answer
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Which of the following statements is correct?

Correct Answer
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a. The only potential source of unrelate...
View Answer

Correct Answer
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The income from the factory building is ...
View Answer

Discuss any negative tax consequences that result from an exempt organization being classified as a private foundation.

Correct Answer
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Two potential negative tax consequences ...
View Answer

Match the following statements. -§ 501(h) election

Correct Answer
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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.

Correct Answer
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Correct Answer
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a. In this case, the $900,000 is exempt ...
View Answer

An educational organization such as the College of William and Mary that is exempt under § 501(c)(3) cannot be classified as a private foundation if its only sources of revenue are from tuition and alumni contributions.

Correct Answer
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Which of the following statements are correct?

Correct Answer
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A church is one of the types of exempt organizations.

Correct Answer
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Exam 15: Exempt Entities

Match the following statements. -Branded calendars

Correct AnswerverifiedShow Answer

Which of the following activities is not subject to the feeder organization rules?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following excise taxes are imposed on private foundations?

Correct AnswerverifiedShow Answer

For an activity to be considered as regularly carried on for purposes of the unrelated business income tax, the activity must be conducted during the work week (i.e., activities performed on the weekend are not considered in determining if the activity is regularly carried on).

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following qualify as exempt organizations?

Correct AnswerverifiedShow Answer

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, but is subject to the tax on feeder organizations.

Correct AnswerverifiedShow Answer

Give an example of the indicated types of exempt organizations. -§ 501(c) (4) civic league

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct Answerverifieda. The only potential source of unrelate...View AnswerShow Answer

Correct AnswerverifiedThe income from the factory building is ...View AnswerShow Answer

Discuss any negative tax consequences that result from an exempt organization being classified as a private foundation.

Correct AnswerverifiedTwo potential negative tax consequences ...View AnswerShow Answer

Match the following statements. -§ 501(h) election

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct Answerverifieda. In this case, the $900,000 is exempt ...View AnswerShow Answer

An educational organization such as the College of William and Mary that is exempt under § 501(c)(3) cannot be classified as a private foundation if its only sources of revenue are from tuition and alumni contributions.

Correct AnswerverifiedShow Answer

Which of the following statements are correct?

Correct AnswerverifiedShow Answer

A church is one of the types of exempt organizations.

Correct AnswerverifiedShow Answer

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Correct Answer
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a. The only potential source of unrelate...
View Answer

Correct Answer
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The income from the factory building is ...
View Answer

Correct Answer
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Two potential negative tax consequences ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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a. In this case, the $900,000 is exempt ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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