Question 1

Which of the following statements are correct?
A)If an exempt organization has annual gross receipts of less than $50,000, it files an e-Postcard (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.

Accepted Answer

A) True - Exempt organizations with annual gross receipts less than $50,000 must file an e-Postcard (Form 990-N) with the IRS. 
B) True - Private foundations must file Form 990-PF (Return of Private Foundation) annually. 
C) True - Exempt organizations with gross receipts of less than $250,000 may file a Form 990-EZ, which is a shorter and simpler version of Form 990.

Therefore, all three statements are correct and the best choice is E - "a., b., and c. all are correct."

Question 2

Medical, Inc., a § 501(c)(3) exempt organization, engages in an excess benefit transaction.The amount of the excess benefit is $200,000.For the organization management, the participation in the excess benefit transaction was not willful and was due to reasonable cause.Calculate the amount of the excise tax (first-level tax) imposed under the intermediate sanctions provision.

Accepted Answer

The answer of Medical, Inc., a § 501(c)(3) exempt organization,...

Question 3

Miracle, Inc., is a § 501(c)(3) organization involved in medical research.Based on its expectation that proposed legislation will adversely affect the funding supporting its mission, Miracle hires a lobbyist to work in Washington to represent its views.

Accepted Answer

The answer of Miracle, Inc., is a § 501(c)(3) organization...

Question 4

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)Exempt organizations whose annual gross receipts do not exceed $50,000.
D)Private foundations.
E)None of these entities must file Form 990.

Accepted Answer

The answer of Which of the following exempt organizations are...

Question 5

Match the following statements.

Accepted Answer

The answer of Match the following statements.
 ...

Question 6

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.

Accepted Answer

The answer of Help, Inc., a tax-exempt organization, incurs lobbying...

Question 7

Nice, Inc., a § 501(c)(3) organization, inherited 100% of the stock of Aggressive, Inc., a for-profit entity, at the beginning of the year.Although Nice plans on selling the stock of Aggressive, a buyer has not yet been located.Aggressive's taxable income for the year is $600,000.Aggressive distributed a dividend of $450,000 to Nice at the beginning of December.Determine the tax consequences for the taxable income and the dividend payment to Aggressive, Inc.

Accepted Answer

The answer of Nice, Inc., a § 501(c)(3) organization, inherited...

Question 8

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)Exempt organizations whose annual gross receipts do not exceed $50,000 can file an e-Postcard.
D)Only a.and b.are incorrect.
E)a., b., and c.are incorrect.

Accepted Answer

All three statements are incorrect. Churches are not required to file Form 990 regardless of their annual gross receipts. The due date for both Form 990 and Form 990-PF is the fifteenth day of the fifth month after the end of the taxable year. Exempt organizations whose annual gross receipts do not exceed $50,000 can file Form 990-N, also known as the e-Postcard.

Question 9

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.

Accepted Answer

The answer of Acquisition indebtedness consists of the unpaid amounts...

Question 10

Match the following tax forms.

Accepted Answer

The answer of Match the following tax forms.
 ...

Question 11

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.

Accepted Answer

The answer of Which of the following is one of...

Question 12

Match the following statements with the correct description.

Accepted Answer

The answer of Match the following statements with the correct...

Question 13

Match the following statements.

Accepted Answer

The answer of Match the following statements.
 ...

Question 14

Match the following statements.

Accepted Answer

The answer of Match the following statements.
 ...

Question 15

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.

Accepted Answer

The answer of Which of the following are consequences of...

Question 16

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.

Accepted Answer

Option A is correct because the "widely available requirement" can be satisfied by posting the required tax forms on the Internet. 
Option B is correct because Forms 990 and 1023 must be readily available to the general public. 
Option C is correct because if an individual requests a copy of the required tax forms in writing, the exempt entity must provide a copy within 30 days. Therefore, options a, b, and c are all correct statements regarding the disclosure regulations.

Question 17

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 organization's 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 organization's exempt purpose.
E)All of the above are requirements.

Accepted Answer

All of the other requirements listed are necessary for land to be excluded from the definition of debt-financed property for purposes of UBIT. However, there is no requirement that the fair market value of the land acquired for later exempt-use must not exceed 50% of the fair market value of land presently owned by the exempt organization.

Question 18

Give an example of the indicated types of exempt organizations.

Accepted Answer

The answer of Give an example of the indicated types...

Question 19

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.

Accepted Answer

To maintain exempt status, an organization must satisfy both an organizational test and an operational test. The organizational test looks at the organization's structure and purposes, while the operational test looks at its activities and how they align with its exempt purpose. Both tests must be met to maintain exempt status. A financial test is not required for maintaining exempt status, and once exempt status is granted, it is not guaranteed to continue indefinitely without meeting the organizational and operational tests.

Question 20

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

Accepted Answer

The answer of For each of the following taxes which...

Quiz 23: Exempt Entities

Which of the following statements are correct?

Miracle, Inc., is a § 501(c)(3) organization involved in medical research.Based on its expectation that proposed legislation will adversely affect the funding supporting its mission, Miracle hires a lobbyist to work in Washington to represent its views.

Which of the following exempt organizations are required to file Form 990 (Return of Organization Exempt from Income Tax) ?

Match the following statements.

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.

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

Acquisition indebtedness consists of the unpaid amounts of which of the following for debt-financed property?

Match the following tax forms.

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?

Match the following statements with the correct description.

Match the following statements.

Match the following statements.

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

Which of the following statements regarding the disclosure Regulations is correct?

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?

Give an example of the indicated types of exempt organizations.

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

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