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Exam 15: Exempt Entities

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Question 41

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Swan,Inc. ,a tax-exempt organization,leases a building and equipment to ABC Corporation.The rental income from the building is $160,000 and from the equipment is $12,000.Rental expenses are $100,000 for the building and $11,000 for the equipment.What adjustment must be made to net unrelated business income?

A) $0.
B) ($11,000) .
C) ($12,000) .
D) ($61,000) .
E) Some other amount.

F) A) and B)
G) C) and D)

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Question 42

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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).

A) True
B) False

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Question 43

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Theater,Inc. ,an exempt organization,owns a printing company,Printers,Inc. ,which remits 80% of its profits to Theater,Inc.Since Printers remits at least 80% of its profits to Theater,neither Theater,Inc. ,nor Printers,Inc. ,must pay income tax on this $80,000 ($100,000 ´ 80%).

Even though a church is not required to obtain IRS approval of its exempt status,it still must file Form 990 (Return of Organization Exempt from Income Tax)annually.

Which of the following statements are correct with respect to the unrelated business income tax?

Robin,Inc. ,an exempt organization,acquired a building for $400,000 which it will lease to XYZ,Inc. ,for $40,000 annually.To finance the acquisition of the building,Robin secures a mortgage on it of $250,000.Advise Robin as to whether it has any unrelated debt-financed income or deductions.

The tax consequences to a donor of making a charitable contribution to an exempt organization classified as a private foundation are the same as the tax consequences to a donor of making a charitable contribution to an exempt organization that is not classified as a private foundation.

The due date for both Form 990 (Return of Organization Exempt from Income Tax)and Form 990-PF (Return of Private Foundation)is the fifteenth day of the fifth month after the end of the taxable year.

Which of the following statements is correct?

What are the common characteristics of organizations that receive exempt status?

Which of the following qualify as exempt organizations?

If an exempt organization distributes "low-cost items" as an incidental part of its solicitation for charitable contributions,the distribution is not considered an unrelated trade or business.

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

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

Which of the following excise taxes are imposed on the private foundation because it engages in prohibited transactions?

A § 501(c)(3)organization exchanges its membership lists with another exempt organization.What are the Federal income tax consequences?

If an organization qualifies for exempt status for Federal income tax purposes,it is exempt from all Federal income taxes.

Tan,Inc. ,a tax-exempt organization,has $65,000 of net unrelated business income.Total charitable contributions (all associated with the unrelated trade or business) are $7,500.Assuming that the $7,500 was deducted in calculating net unrelated business income,what is Tan's unrelated business taxable income?

The excise tax imposed on private foundations for excess business holdings is imposed on investments that enable the private foundation to control publicly-held rather than privately-held businesses.

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