Question 1

Certain § 501(c)(3) exempt organizations are permitted to engage in lobbying activities in the same manner as taxable organizations.

Accepted Answer

A) True 
 B)False

Question 2

Engaging in a prohibited transaction can result in an exempt organization being subject to Federal income tax, but cannot cause it to lose its exempt status unless the exempt organization repeats the prohibited transaction.

Accepted Answer

A) True 
 B)False

Question 3

George is running for mayor of Culpepper. The members of Third Church adamantly oppose his candidacy. They would like to run a political advertisement in the local newspaper opposing his candidacy. The newspaper ad would have no effect on Third Church's exempt status because the ad opposes George; it does not support his opponent.

Accepted Answer

A) True 
 B)False

Question 4

All organizations that are exempt from Federal income tax are exempt under § 501(c)(3).

Accepted Answer

A) True 
 B)False

Question 5

Give an example of the indicated types of exempt organizations
-Not an exempt organization

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) None of the above
G) B) and C)

Question 6

If the unrelated business income of an exempt organization is $25,000 or less, the unrelated business income tax (UBIT) will be $0.

Accepted Answer

A) True 
 B)False  False

Question 7

Discuss benefits for which an exempt organization may be eligible, other than exemption from Federal income tax.

Accepted Answer

In addition to being exempt from Federal...

Question 8

Teal, Inc., is a private foundation which failed to distribute an adequate amount of income for the exempt purpose of Teal. Which of the following statements is correct?

Accepted Answer

A)   An excise tax in the form of an initial tax at the rate of 5% may be imposed on Teal.
B)   An excise tax in the form of an initial tax at the rate of 2.5% may be imposed on the foundation manager.
C)   An excise tax in the form of an additional tax at the rate of 100% may be imposed on Teal.
D)   An excise tax in the form of an additional tax at the rate of 50% may be imposed on the foundation manager.
E)   None of the statements is correct.F) C) and E)
G) D) and E)

Question 9

If an exempt organization conducts a trade or business that consists of either exchanging or renting to other exempt organizations the organization's donor or membership list, such trade or business is an unrelated trade or business.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements regarding intermediate sanctions is correct?

Accepted Answer

A)   Intermediate sanctions are self-assessing (i.e., calculated and paid by the taxpayer rather than being imposed by the IRS) .
B)   The excise tax is imposed on the exempt organization and on disqualified persons.
C)   Both a first-level tax and a second-level tax may apply.
D)   The corporate tax rates apply in calculating the amount of the tax liability.
E)   None of the above is correct.F) A) and B)
G) C) and D) C

Question 11

Match the following statements
-Tax on self-dealing

Accepted Answer

A)  ​May be subject to some Federal income taxation and classification may adversely affect amount of charitable contributions received.
B)  Tax imposed for engaging in transactions with disqualified persons.
C)  Tax imposed on investments that enable a private foundation to control unrelated for-profit businesses.​​D) A) and B)
E) A) and C)

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Match the following tax forms
-Form 1023

Accepted Answer

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 under Chapters 41 and 42 of the Internal Revenue Code.
E)  Application for Recognition of Exemption under § 501(a) .F) Application for Extension of Time.G) A) and C)
H) A) and D)

Question 15

For each of the following taxes which are imposed on private foundations and/or Foundation Managers, match the appropriate initial tax or additional tax
-Tax on jeopardizing investments

Accepted Answer

A)  5% initial tax and 25% additional tax on private foundation.
B)  15% initial tax and 100% additional tax on private foundation.
C)  100% additional tax on private foundation and 50% additional tax on foundation manager.
D)  5% initial tax and 200% additional tax on private foundation.
E)  5% initial tax and 200% additional tax on the disqualified person.F) A) and B)
G) D) and E)

Question 16

Match the following tax forms
-Form 4720

Accepted Answer

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 under Chapters 41 and 42 of the Internal Revenue Code.
E)  Application for Recognition of Exemption under § 501(a) .F) Application for Extension of Time.G) A) and E)
H) A) and F) D

Question 17

Match the following statements
-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.

Accepted Answer

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 that is required to file a return and which is not a private foundation.
E)  Appropriate definition.f.Annual information return of a private foundation.F) A) and B)
G) C) and D)

Question 18

Ice, Inc., a § 501(c)(3) organization, has been leasing a building to Soft, Inc., a taxable entity, for 15 years. The lease terminates in the current tax year. Ice's adjusted basis for the building is $225,000. It sells the building to the Development Partnership, a taxable entity, for $440,000. Selling expenses are $26,400. Calculate the effect of the sale on Ice's UBTI.

Accepted Answer

The answer of Ice, Inc., a § 501(c)(3) organization, has...

Question 19

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

Accepted Answer

A)   Only an external support test.
B)   Only an internal support test.
C)   Both an external support test and an internal support test.
D)   An external support test, an internal support test, and a good faith test.
E)   None of the above.F) C) and D)
G) A) and B)

Question 20

Revenue generated by an exempt organization from the distribution of low-cost items is not income from an unrelated trade or business.

Accepted Answer

A) True 
 B)False

Exam 15: Exempt Entities

Certain § 501(c)(3) exempt organizations are permitted to engage in lobbying activities in the same manner as taxable organizations.

Correct Answer
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Engaging in a prohibited transaction can result in an exempt organization being subject to Federal income tax, but cannot cause it to lose its exempt status unless the exempt organization repeats the prohibited transaction.

Correct Answer
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Correct Answer
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All organizations that are exempt from Federal income tax are exempt under § 501(c)(3).

Correct Answer
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Give an example of the indicated types of exempt organizations -Not an exempt organization

Correct Answer
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If the unrelated business income of an exempt organization is $25,000 or less, the unrelated business income tax (UBIT) will be $0.

Correct Answer
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False

Discuss benefits for which an exempt organization may be eligible, other than exemption from Federal income tax.

Correct Answer
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In addition to being exempt from Federal...
View Answer

Teal, Inc., is a private foundation which failed to distribute an adequate amount of income for the exempt purpose of Teal. Which of the following statements is correct?

Correct Answer
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If an exempt organization conducts a trade or business that consists of either exchanging or renting to other exempt organizations the organization's donor or membership list, such trade or business is an unrelated trade or business.

Correct Answer
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Which of the following statements regarding intermediate sanctions is correct?

Correct Answer
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C

Match the following statements -Tax on self-dealing

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

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

Correct Answer
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Match the following tax forms -Form 1023

Correct Answer
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For each of the following taxes which are imposed on private foundations and/or Foundation Managers, match the appropriate initial tax or additional tax -Tax on jeopardizing investments

Correct Answer
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Match the following tax forms -Form 4720

Correct Answer
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D

Match the following statements -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.

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

Correct Answer
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Revenue generated by an exempt organization from the distribution of low-cost items is not income from an unrelated trade or business.

Correct Answer
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Exam 15: Exempt Entities

Certain § 501(c)(3) exempt organizations are permitted to engage in lobbying activities in the same manner as taxable organizations.

Correct AnswerverifiedShow Answer

Engaging in a prohibited transaction can result in an exempt organization being subject to Federal income tax, but cannot cause it to lose its exempt status unless the exempt organization repeats the prohibited transaction.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

All organizations that are exempt from Federal income tax are exempt under § 501(c)(3).

Correct AnswerverifiedShow Answer

Give an example of the indicated types of exempt organizations -Not an exempt organization

Correct AnswerverifiedShow Answer

If the unrelated business income of an exempt organization is $25,000 or less, the unrelated business income tax (UBIT) will be $0.

Correct AnswerverifiedFalse

Discuss benefits for which an exempt organization may be eligible, other than exemption from Federal income tax.

Correct AnswerverifiedIn addition to being exempt from Federal...View AnswerShow Answer

Teal, Inc., is a private foundation which failed to distribute an adequate amount of income for the exempt purpose of Teal. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

If an exempt organization conducts a trade or business that consists of either exchanging or renting to other exempt organizations the organization's donor or membership list, such trade or business is an unrelated trade or business.

Correct AnswerverifiedShow Answer

Which of the following statements regarding intermediate sanctions is correct?

Correct AnswerverifiedC

Match the following statements -Tax on self-dealing

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Match the following tax forms -Form 1023

Correct AnswerverifiedShow Answer

For each of the following taxes which are imposed on private foundations and/or Foundation Managers, match the appropriate initial tax or additional tax -Tax on jeopardizing investments

Correct AnswerverifiedShow Answer

Match the following tax forms -Form 4720

Correct AnswerverifiedD

Match the following statements -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.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Revenue generated by an exempt organization from the distribution of low-cost items is not income from an unrelated trade or business.

Correct AnswerverifiedShow Answer

Correct Answer
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False

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In addition to being exempt from Federal...
View Answer

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C

Correct Answer
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Correct Answer
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D

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