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Exam 15: Exempt Entities

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Question 51

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The League of Women Voters is a § 501(c)(3) organization.

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Question 52

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Match the following tax forms. -Form 990-PF

A) Return of Private Foundation.
B) Application for Recognition of Exemption under § 501(c) (3) .
C) Return of Organization Exempt from Income Tax.
D) Return of Certain Excise Taxes on Charities and Other Persons.
E) Application for Recognition of Exemption under § 501(a) .
F) Application for Extension of Time.

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Question 53

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Under what part of § 501(c) are most organizations exempt from Federal income taxation?

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

Define a qualified corporate sponsorship payment.

Describe how an exempt organization can be eligible to make lobbying expenditures without losing its tax exemption.

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?

Only certain exempt organizations must obtain IRS approval to obtain exempt status.

Spirit, Inc., a § 501(c)(3) organization, is classified as a private foundation. It has investment income of $175,000. Calculate Spirit's tax on its investment income.

For each of the following taxes which are imposed on private foundations, match the appropriate initial tax or additional tax. -Tax on taxable expenditures

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. a. Will the lobbying expense result in Help losing its exempt status? b. Calculate the amount of any tax that Help must pay associated with its lobbying expenses.

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

Which of the following statements regarding exempt organization filing requirements is incorrect?

Well, Inc., a private foundation, makes a speculative investment of $400,000 that puts the foundation assets at risk. Calculate the tax on jeopardizing investments. Assume that corrective action is taken so that the additional tax does not apply.

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

The excise tax imposed on a private foundation's investment income can be imposed as an initial (first­level) tax but cannot be imposed as an additional (second-level) tax.

Loyal, Inc., is a §501(c)(3) organization that is not classified as a private foundation. During the current year, it is subject to intermediate sanctions. What other options does the IRS have in dealing with an exempt organization engaging in prohibited transactions?

Match the following statements. a. Exempt from tax on unrelated business. b. Inappropriate definition. c. Exempt organization may be subject to the tax on unrelated business income. d. Annual information return of an exempt organization which is not a private foundation. e. Appropriate definition. f. Annual information return of a private foundation. -The trade or business is not substantially related to the exempt purpose of the organization.

Arbor, Inc., an exempt organization, leases land, building, and machinery to a tenant for a 5-year period. The rent income for the land and building is $400,000 per year and that from the related machinery is $80,000 per year. Expenses incurred by Arbor for the land and building during the year are $60,000 and those for the machinery are $36,000. Net unrelated business income, which includes the above rental income and expenses, is $800,000. Calculate Arbor's unrelated business taxable income.

To maintain exempt status, an organization must do which of the following: