1710. CHAPTER 15EXEMPT ENTITIES Question MC #31
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?
a. The principal purpose of acquiring the land is for use (substantially all) in achieving the organizations exempt purpose.
b. The fair market value of the land is not over 50% of the fair market value of land presently owned by the exempt organization.
c. The use of the land by the exempt organization will begin within ten years of the acquisition date.
d. At the date the land is acquired, it is located in the neighborhood of other property of the organization for which substantially all the use is for achieving the organizations exempt purpose.
e. All of the above are requirements.
1711. CHAPTER 15EXEMPT ENTITIES Question MC #32
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 organizations exempt purpose.
c. The land is located in the United States.
d. Only a. and b.
e. None of the above.
1712. CHAPTER 15EXEMPT ENTITIES Question MC #33
Acquisition indebtedness consists of the unpaid amounts of which of the following for debt-financed property?
a. Debt incurred in acquiring or improving the property.
b. Debt incurred to enable the organization to carry out its exempt purpose.
c. Debt incurred to enable the exempt organization to acquire a feeder organization.
d. Only a. and b.
e. a., b., and c.
1713. CHAPTER 15EXEMPT ENTITIES Question MC #34
Which of the following are consequences of tax-exempt status?
a. Not necessary to file a Federal income tax return.
b. Generally exempt from Federal income tax.
c. Contributions to the exempt organization are deductible by the donor.
d. Only b. and c.
e. a., b., and c.
1714. CHAPTER 15EXEMPT ENTITIES Question MC #35
Which of the following exempt organizations are required to file Form 990 (Return of Organization Exempt from Income Tax)?
a. Federal agencies.
b. Churches.
c. Private foundations.
d. None of these entities must file Form 990.
1715. CHAPTER 15EXEMPT ENTITIES Question MC #36
Which of the following statements are correct?
a. If an exempt organization has annual gross receipts of less than $50,000, it does not file Form 990 (Return of Organization Exempt from Federal Income Tax).
b. Private foundations must file Form 990-PF (Return of Private Foundation).
c. If the gross income from an unrelated trade or business is less than $1,000, it is not necessary to file a return associated with the unrelated business income tax.
d. Only a. and c. are correct.
e. a., b., and c. are all correct.
1716. CHAPTER 15EXEMPT ENTITIES Question MC #37
Which of the following statements regarding exempt organization filing requirements is incorrect?
a. Churches are required to file Form 990 (Return of Organization Exempt from Income Tax) only if its annual gross receipts exceed $50,000.
b. The due date for Form 990 (Return of Organization Exempt from Income Tax) is the fifteenth day of the fifth month after the end of the taxable year whereas for private foundations the due date for Form 990-PF (Return of Private Foundation) is the fifteenth day of the fourth month after the end of the tax year.
c. All exempt organizations whose annual gross receipts do not exceed $50,000 can file Form 990-N (the e-Postcard).
d. Only a. and b. are incorrect.
e. a., b., and c. are incorrect.
1717. CHAPTER 15EXEMPT ENTITIES Question MC #38
Which of the following statements regarding the disclosure Regulations is correct?
a. Posting the required tax forms on the Internet is an acceptable technique for satisfying the widely available requirement.
b. Forms 990 and 1023 must be readily available to the general public.
c. If an individual requests a copy of the required tax forms in writing, the exempt entity must provide a copy within 30 days.
d. Only a. and b. are correct.
e. a., b., and c. are all correct.
1718. CHAPTER 15EXEMPT ENTITIES Question MC #39
To maintain exempt status, an organization must do which of the following:
a. Satisfy only an organizational test.
b. Satisfy only an operational test.
c. Satisfy both an organizational test and an operational test.
d. Satisfy a financial test.
e. Once exempt status is granted, it will continue regardless of whether the organizational test and the operational test are satisfied.
1719. CHAPTER 15EXEMPT ENTITIES Question MA #1-5
Give an example of the indicated types of exempt organizations.§ 501(c)(3) organization§ 501(c)(4) civic league§ 501(c)(5) labor organization§ 501(c)(6) business leagueNot an exempt organizationSalvation Army. League of Women Voters. Teachers association. American Plywood Association. Six Flags over Texas theme park.
1. § 501(c)(3) organization
2. § 501(c)(4) civic league
3. § 501(c)(5) labor organization
4. § 501(c)(6) business league
5. Not an exempt organization
a. Salvation Army.
b. League of Women Voters.
c. Teachers association.
d. American Plywood Association.
e. Six Flags over Texas theme park.
1720. CHAPTER 15EXEMPT ENTITIES Question MA #6-10
Match the following statements with the correct description.Exempt organizationFeeder organizationUniversity of VirginiaKentwood Rodeo Club§ 501(h)May not be subject to Federal income tax. Carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt organization. Exempt organization under § 501(c)(3). Exempt organization under § 501(c)(7). Permits limited lobbying activities.
1. Exempt organization
2. Feeder organization
3. University of Virginia
4. Kentwood Rodeo Club
5. § 501(h)
a. May not be subject to Federal income tax.
b. Carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt organization.
c. Exempt organization under § 501(c)(3).
d. Exempt organization under § 501(c)(7).
e. Permits limited lobbying activities.
1721. CHAPTER 15EXEMPT ENTITIES Question MA #11-15
For each of the following taxes which are imposed on private foundations, match the appropriate initial tax or additional tax.Tax on self-dealingTax on failure to distributeTax on excess business holdingsTax on jeopardizing investmentsTax on taxable expenditures5% initial tax and 200% additional tax on the disqualified person. 15% initial tax and 100% additional tax on private foundation. 5% initial tax and 200% additional tax on private foundation. 5% initial tax and 25% additional tax on private foundation. 100% additional tax on private foundation and 50% additional tax on foundation manager.
1. Tax on self-dealing
2. Tax on failure to distribute
3. Tax on excess business holdings
4. Tax on jeopardizing investments
5. Tax on taxable expenditures
a. 5% initial tax and 200% additional tax on the disqualified person.
b. 15% initial tax and 100% additional tax on private foundation.
c. 5% initial tax and 200% additional tax on private foundation.
d. 5% initial tax and 25% additional tax on private foundation.
e. 100% additional tax on private foundation and 50% additional tax on foundation manager.
1722. CHAPTER 15EXEMPT ENTITIES Question MA #16-20
Match the following statements.Private foundationFeeder organization§ 501(h) electionTax on self-dealingTax on excess business holdingsMay be subject to some Federal income taxation and classification may adversely affect amount of charitable contributions received. 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. Enables certain exempt organizations to engage in lobbying activities on a limited basis. Tax imposed for engaging in transactions with disqualified persons. Tax imposed on investments that enable a private foundation to control unrelated businesses.
1. Private foundation
2. Feeder organization
3. § 501(h) election
4. Tax on self-dealing
5. Tax on excess business holdings
a. May be subject to some Federal income taxation and classification may adversely affect amount of charitable contributions received.
b. 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.
c. Enables certain exempt organizations to engage in lobbying activities on a limited basis.
d. Tax imposed for engaging in transactions with disqualified persons.
e. Tax imposed on investments that enable a private foundation to control unrelated businesses.
1723. CHAPTER 15EXEMPT ENTITIES Question MA #21-26
Match the following statements.The trade or business is not substantially related to the exempt purpose of the organization.The trade or business consists of selling merchandise, and substantially all of the merchandise has been received as gifts or contributions.Unrelated business income is generally that derived from the unrelated trade or business, reduced by the deductions directly connected with the conduct of the unrelated trade or business.Debt-financed income is the net income from debt financed property.Form 990.Form 990-PF.Exempt organization may be subject to the tax on unrelated business income. Exempt from tax on unrelated business. Appropriate definition. Inappropriate definition. Annual information return of an exempt organization which is not a private foundation. Annual information return of a private foundation.
1. The trade or business is not substantially related to the exempt purpose of the organization.
2. The trade or business consists of selling merchandise, and substantially all of the merchandise has been received as gifts or contributions.
3. Unrelated business income is generally that derived from the unrelated trade or business, reduced by the deductions directly connected with the conduct of the unrelated trade or business.
4. Debt-financed income is the net income from debt financed property.
5. Form 990.
6. Form 990-PF.
a. Exempt organization may be subject to the tax on unrelated business income.
b. Exempt from tax on unrelated business.
c. Appropriate definition.
d. Inappropriate definition.
e. Annual information return of an exempt organization which is not a private foundation.
f. Annual information return of a private foundation.
1724. CHAPTER 15EXEMPT ENTITIES Question MA #27-32
Match the following tax forms.Form 990Form 990-PFForm 1023Form 1024Form 2758Form 4720Return of Organization Exempt from Income Tax. Return of Private Foundation. Application for Recognition of Exemption under § 501(c)(3). Application for Recognition of Exemption under § 501(a). Application for Extension of Time. Return of Certain Excise Taxes on Charities and Other Persons.
1. Form 990
2. Form 990-PF
3. Form 1023
4. Form 1024
5. Form 2758
6. Form 4720
a. Return of Organization Exempt from Income Tax.
b. Return of Private Foundation.
c. Application for Recognition of Exemption under § 501(c)(3).
d. Application for Recognition of Exemption under § 501(a).
e. Application for Extension of Time.
f. Return of Certain Excise Taxes on Charities and Other Persons.
1725. CHAPTER 15EXEMPT ENTITIES Question MA #33-36
Match the following statements.Bingo gamesCorporate sponsorship paymentsLow cost articlesMembership listsIs considered an unrelated trade or business if can be conducted by commercial (for-profit) entities. 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. Distribution of such items is not considered an unrelated trade or business if the value does not exceed $9.70 in 2011. A trade or business that consists of either renting or exchanging these with another exempt organization is not an unrelated trade or business.
1. Bingo games
2. Corporate sponsorship payments
3. Low cost articles
4. Membership lists
a. Is considered an unrelated trade or business if can be conducted by commercial (for-profit) entities.
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. Distribution of such items is not considered an unrelated trade or business if the value does not exceed $9.70 in 2011.
d. A trade or business that consists of either renting or exchanging these with another exempt organization is not an unrelated trade or business.