SU 20: Exempt Organizations

Failure to file an annual report for how many years in a row will subject an exempt organization to loss of its exempt status? -1 year. -3 years. -2 years. -5 years.

-3 years.

An exempt scientific research organization elected a $30,000 lobbying expenditure limit for 2021. During 2021, $40,000 was spent on political lobbying. What is the consequence of the 2021 expenditure? -A $2,500 excise tax. -Loss of exempt status. -A $10,000 excise tax. -No loss of exemption or excise tax liability.

-A $2,500 excise tax.

Give-A-Lot is the parent organization for Share-A-Lot, a public charity, and Keep-A-Lot, a private foundation. Which of the following may Give-A-Lot file? -Give-A-Lot, Share-A-Lot, and Keep-A-Lot's Forms 990. -Give-A-Lot and Keep-A-Lot's Forms 990. -Give-A-Lot and Share-A-Lot's Forms 990. -Share-A-Lot's Form 990-PF.

-Give-A-Lot and Share-A-Lot's Forms 990.

A charitable, religious, or scientific organization is presumed to be a private foundation if it -Is a church. -Notifies the IRS of public charity status on Form 1023. -Has annual gross receipts under $5,000. -Has annual gross receipts over $5,000.

-Has annual gross receipts over $5,000.

Generally, an organization receiving more than a third of its support (annually) from its members and the general public results in -Requirement of filing a written application with the IRS district director. -Private foundations becoming public charities. -Qualified trusts losing exempt status. -Public charities losing exempt status.

-Private foundations becoming public charities.

Which of the following is NOT an exempt organization? -American Society for the Prevention of Cruelty to Animals. -Red Cross. -State-chartered credit unions. -Privately owned nursing home.

-Privately owned nursing home.

Which of the following statements about exempt organizations' requirement to file annual information returns is false? -Private foundations are required to file regardless of gross receipts. -Exempt status may be denied or revoked for failure to file. -Public charities with less than $100,000 in gross receipts are exempt from filing. -Church-affiliated organizations are exempt from filing.

-Public charities with less than $100,000 in gross receipts are exempt from filing.

Which of the following may qualify for exempt status under IRC 501(c)(3)? -Individual. -S-corp. shareholder. -School. -Partner.

-School.

If an exempt organization is a charitable trust, then unrelated business taxable income is -Not subject to tax. -Subject to tax only for the amount of this income in excess of $1,000. -Taxed at rates applicable to trusts. -Subject to tax even if this income is less than $1,000.

-Subject to tax only for the amount of this income in excess of $1,000.

Arthur is to receive 30% of partnership income, but not less than $5,000. The partnership has net income of $10,000 before any allocation. How much income should the partners report? Arthur's Guaranteed Payment-Other Distributive Share-Other Partner's Total Distributive Share $5,000-$1,500-$3,500 $5,000-$3,000-$2,000 $0-$3,000-$7,000 $2,000-$3,000-$5,000

Arthur's Guaranteed Payment$2,000-$3,000-$5,000. 5,000-(10,000x30%)

Tax is imposed on unrelated business taxable income (UBTI) of a tax-exempt trust only if the amount of UBTI for the tax year exceeds -10% of net income. $100 $1,000 $2,550

$1,000.

With respect to the filing requirements of an exempt organization (including private foundations), which of the following statements is true? -A central or parent organization may file Form 990, Return of Organization Exempt from Income Tax, for two or more local organizations that are not private foundations. However, this return is in addition to the central or parent organization's separate annual return if it must file one. -Every organization exempt from income tax must file an annual information return. -Forms 990, 990-EZ, and 990-PF are required to be filed by the 15th day of the third month after the end of the organization's accounting period. -An exempt organization must have at least $5,000 gross income from an unrelated business before it is required to file Form 990-T, Exempt Organization Business Income Tax Return.

-A central or parent organization may file Form 990, Return of Organization Exempt from Income Tax, for two or more local organizations that are not private foundations. However, this return is in addition to the central or parent organization's separate annual return if it must file one.

Which of the following organizations is NOT required to file an annual information return, such as Form 990, Return of Organization Exempt from Income Tax? -All are required to file with no exceptions. -Any exempt organization with annual gross receipts exceeding $50,000. -A convention or an association of churches with annual gross receipts exceeding $50,000. -Any chamber of commerce with annual gross receipts exceeding $50,000.

-A convention or an association of churches with annual gross receipts exceeding $50,000.

Which one of the following types of entities may qualify as a tax-exempt organization? -An individual. -A corporation. -A partnership. -An estate.

-A corporation.

Which of the following statements is true with respect to tax-exempt organizations? -An individual can qualify as an organization exempt from federal income tax. -In order to qualify as an exempt organization, the organization must be a corporation. -A partnership may qualify as an organization exempt from federal income tax if it is organized and operated exclusively for one or more of the purposes found in Sec. 501(c)(3). -A foundation may qualify for exemption from federal income tax if it is organized for the prevention of cruelty to animals.

-A foundation may qualify for exemption from federal income tax if it is organized for the prevention of cruelty to animals.

Which of the following may file Form 990-EZ? -An exempt organization with $550,000 in total assets. -An exempt organization with $600,000 in total assets. -An exempt organization with $210,000 in gross receipts. -A nonexempt charitable trust.

-A nonexempt charitable trust.

Of the organizations listed below, which organization could NOT receive approval for tax-exempt status under Internal Revenue Code Sec. 501(c)(3)? -A local chapter of the Salvation Army. -A partnership for scientific research. -A college alumni association. -A local boys club.

-A partnership for scientific research.

Which of the following organizations, exempt from federal income tax under Sec. 501(a), must file an annual information return on Form 990 or Form 990-PF? -A private foundation exempt under Sec. 501(c)(3) of the IRC. -A stock bonus, pension, or profit-sharing trust that qualifies under Sec. 401 of the IRC. -An organization, other than a private foundation, having gross receipts in each year that normally are not more than $50,000. -A school below college level, affiliated with a church or operated by a religious order, that is not an integrated auxiliary of a church.

-A private foundation exempt under Sec. 501(c)(3) of the IRC.

Which of the following organizations, exempt from federal income tax under Sec. 501(a), must file an annual information return on Form 990 or Form 990-PF? -An organization, other than a private foundation, having gross receipts in each year that normally are not more than $50,000. -A school below college level, affiliated with a church or operated by a religious order, that is not an integrated auxiliary of a church. -A private foundation exempt under Sec. 501(c)(3) of the Internal Revenue Code. -A stock bonus, pension, or profit-sharing trust that qualifies under Sec. 401 of the Internal Revenue Code.

-A private foundation exempt under Sec. 501(c)(3) of the Internal Revenue Code.

Which of the following organizations, which are exempt from federal income tax, must generally file an annual information report? -A church. -An organization, other than a private foundation, with annual gross receipts that normally are not more than $50,000. -A private foundation. -A religious order.

-A private foundation.

Which of the following entities cannot qualify as an organization exempt from income tax? -An educational foundation that engaged in lobbying activity during the year. -An exclusively social club. -A religious organization with annual gross receipts of $10,000 that has not filed Form 1023 with the IRS. -An employees' qualified profit-sharing trust that has never filed a written application for recognition of exemption with the IRS.

-A religious organization with annual gross receipts of $10,000 that has not filed Form 1023 with the IRS.

Which of the following, as stated, will cause an exempt educational organization to lose its exempt status? -Expending more than elected limit for lobbying activities. -Compensating officers of the organization for services performed. -Indirect participation in a political campaign. -A substantial part of activities are an attempt to influence legislation.

-A substantial part of activities are an attempt to influence legislation.

As a general rule, a trust may qualify as a simple trust if -The trust instrument requires that all income must be distributed currently. -The trust does not distribute amounts allocated to the corpus of the trust. -The trust has no provisions for charitable contributions. -All of the answers are correct.

-All of the answers are correct.

Which of the following organizations may request exempt status under the Internal Revenue Code as exempt organizations? -School. -Religious organization. -Animal welfare organization. -All of the answers are correct.

-All of the answers are correct.

Which return might a tax-exempt organization be required to file? -Annual information return, Form 990. -Employment tax returns. -Report of cash received. -All of the answers are correct.

-All of the answers are correct.

Which of the following forms is intended for an exempt organization with gross receipts of $100,000 and total assets of $400,000 on December 31, 2021? -Form 990. -Form 990 Schedule M. -Form 990-EZ. -Form 990 Schedule O.

-Form 990-EZ.

With regard to unrelated business taxable income of an exempt organization, which one of the following statements is true? -An unrelated trade or business activity that results in a loss is excluded from the definition of unrelated business. -An exempt organization that earns any unrelated business taxable income in excess of $100,000 during a particular year will lose its exempt status for that particular year. -The tax on unrelated business taxable income can be imposed even if the unrelated business activity is intermittent and is carried on once a year.

-An exempt organization is not taxed on unrelated business taxable income of less than $1,000.

With respect to tax-exempt organizations, which of the following statements is false? -A foundation may qualify for exemption from federal income tax if it is organized for the prevention of cruelty to children. -An individual may qualify as an organization exempt from federal income tax. -A corporation organized for the prevention of cruelty to animals may qualify for exemption from federal income tax. -A trust organized and operated for the purpose of testing for public safety may qualify for exemption from federal income tax.

-An individual may qualify as an organization exempt from federal income tax.

Which of the following statements is true regarding the unrelated business taxable income of exempt organizations? -Unrelated business taxable income relates to the performance of services but not to the sale of goods. -An unrelated business does not include any activity performed for the organization entirely by unpaid volunteers. -Unrelated business taxable income tax will not be imposed if profits from the unrelated business are used to support the exempt organization's charitable activities. -If an exempt organization has any unrelated business taxable income, it may result in the loss of the organization's exempt status.

-An unrelated business does not include any activity performed for the organization entirely by unpaid volunteers.

A social club will lose exempt status if -It changes from a county club to a yachting club. -Nonmember receipts account for 10% of total receipts. -Any net earnings benefit any private shareholder. -Nonmember receipts account for 30% of total receipts.

-Any net earnings benefit any private shareholder.

The private foundation status of an exempt organization will terminate if it -Is governed by a charter that limits the organization's exempt purposes. -Does not distribute all of its net assets to one or more public charities. -Is a foreign corporation. -Becomes a public charity.

-Becomes a public charity.

Which of the following is NOT an organization exempt from federal income taxes under Subchapter F of the Internal Revenue Code (Sec. 501 et seq.)? -Civic leagues or organizations operated exclusively for the promotion of social welfare. -Fraternal benefit societies. -Labor, agricultural, or horticultural organizations. -Blue Cross and Blue Shield organizations.

-Blue Cross and Blue Shield organizations.

An organization may qualify under Section 501(c)(3) if it is organized exclusively for which of the following purposes? -Charitable. -Political action. -Personal. -Business.

-Charitable.

Individuals may claim a charitable deduction for a contribution to which of the following? -Civic leagues or organizations operated exclusively for the promotion of social welfare. -Organizations operated exclusively for scientific or educational purposes. -Cemetery companies operated exclusively for the benefit of their members. -Civic leagues or organizations operated exclusively for the promotion of social welfare and organizations operated exclusively for scientific or educational purposes.

-Civic leagues or organizations operated exclusively for the promotion of social welfare and organizations operated exclusively for scientific or educational purposes.

Which transaction will not always cause an employee trust to lose exempt status? -Compensating an employee for personal services. -Lending without security. -Lending with some, but not adequate, security. -Lending at below market rates.

-Compensating an employee for personal services.

If an exempt organization is a corporation, the tax on unrelated business taxable income is -Credited against the tax on recognized capital gains. -Computed at rates applicable to trusts. -Computed at corporate income tax rates. -Abated.

-Computed at corporate income tax rates.

Of the following contributions, which one is deductible as a charitable contribution? -Tuition to a university. -Equipment to a cemetery company. -Funds to a political action committee. -Time and services to the Boy Scouts of America.

-Equipment to a cemetery company.

Which of the following statements is true with regard to exempt organizations? -An organization will automatically forfeit its exempt status if any executive or other employee of the organization is paid compensation in excess of $150,000 per year, even if such compensation is reasonable. -Exempt organizations that are required to file annual information returns must disclose the identity of all substantial contributions, in addition to the amount of contributions received. -An organization is automatically exempt from tax merely by meeting the statutory requirements for exemption. -Exempt status of an organization may not be retroactively revoked.

-Exempt organizations that are required to file annual information returns must disclose the identity of all substantial contributions, in addition to the amount of contributions received.

Which of the following best describes a for-profit organization that pays all profits to exempt organizations? -Feeder organization, qualified for exempt status. -Private foundation, qualified for exempt status. -Feeder organization, not qualified for exempt status. -Private foundation, not qualified for exempt status.

-Feeder organization, not qualified for exempt status.

What is the maximum amount of time allowed from the creation of an organization for submission of exemption if the status is to be effective from the date of organization for exempt organizations other than Sec. 501(c)(3) organizations? -Six months. -Nine months. -Twelve months. -Fifteen months.

-Fifteen months.

A criminal conviction may result in which of the following? -A penalty of 75% of underpayment of tax. -A maximum fine of $600,000. -A minimum of 10 years in prison. -Fines and/or prison time for each offense.

-Fines and/or prison time for each offense.

A civic league seeking exempt status is ready to file an application for determination. Which is the appropriate application for the civic league? -Form 990. -Form 1024. -Letter. -Form 1023.

-Form 1024.

An unrelated business taxable income (UBTI) tax return (Form 990-T) will not be required for the current tax year of the organization if the organization -Has unrelated business taxable income of less than $1,000 for the tax year. -Made installment payments of estimated tax that (in total) exceed its tax liability on UBTI for the year. -Is required to and does file an annual information return (Form 990, Return of Organizations Exempt from Income Tax). -Has less than $1,00 of gross income used in computing unrelated business taxable income for the tax year.

-Has less than $1,000 of gross income used in computing unrelated business taxable income for the tax year.

Contributions to which of the following organizations are NOT tax deductible? -501(c)(3) not testing for public safety. -Homeowner's association. -Childcare organization. -Cemetery company.

-Homeowner's association.

A tax-exempt organization must file an annual information return (e.g., Form 990, Return of Organizations Exempt from Income Tax) -Unless all of its income is used for its tax-exempt purpose. -Only if it has gross income of $1,000 or more used in computing UBTI. -Unless all of its income is used for its tax-exempt purpose and none of it is UBTI. -If it is a private foundation even though it has no UBTI.

-If it is a private foundation even though it has no UBTI.

The filing of a return covering unrelated business taxable income -Is not necessary if all of the organization's income is used exclusively for charitable purposes. -Is required of all exempt organizations having at least $1,000 of gross income used in computing unrelated business taxable income for the year. -Relieves the organization of having to file a separate annual information return. -Must be accompanied by a minimum payment of 50% of the tax due as shown on the return, with the balance of tax payable 6 months later.

-Is required of all exempt organizations having at least $1,000 of gross income used in computing unrelated business taxable income for the year.

The Enduro Hunting Club, organized for nonprofitable purposes, took in the following receipts for the year: Membership fees $35,000 Dues $15,000 Assessments for land preservation $15,000 Jerky sales to the public $35,000 Enduro will lose exempt status because -Membership fees are not qualified receipts for exempt status. -Assessments for land preservation are not qualified receipts for exempt status. -Jerky sales account for 35% of total annual receipts. -Dues represent less than 50% of total annual receipts.

-Jerky sales account for 35% of total annual receipts. Exempt status is lost if 35% or more of receipts are from sources other than membership fees, dues, and assessments for social clubs.

Which organization must file a written application using Form 1024? -Educational. -Charitable. -Labor. -Scientific.

-Labor.

Which transaction will cause certain employee trusts to lose exempt status? -Paying compensation for personal services. -Non-prohibited transaction. -Lending without adequate security. -Lending with interest.

-Lending without adequate security.

Which of the following must be filed by a qualified employee pension trust for application for exemption? -Letter. -Form 990. -Form 1024. -Form 1023.

-Letter.

A tax-exempt organization with a calendar tax year was required to file Form 990, Return of Organization Exempt from Income Tax, for Year 1. Disregarding any extensions, when is the return due (do not consider Saturdays, Sundays, or holidays)? -Mar. 15, Year 2 -April 15, Year 2. -June 15, Year 2. -May 15, Year 2.

-May 15, Year 2.

What is the threshold of public support that generally forces a private foundation to terminate that status and become a public charity? -More than two-thirds of support from members and unrelated business taxable income. -More than a third of support from members and the general public. -More than two-thirds of support from investment income and the general public. -More than a third of support from investment income and unrelated business taxable income.

-More than a third of support from members and the general public.

An incorporated exempt organization subject to tax on its current-year unrelated business taxable income (UBTI) -Must make estimated tax payments if its tax can reasonably be expected to be $100 or more. -Must comply with the Code provisions regarding installment payments of estimated income tax by corporations. -Must pay at least 70% of the tax due as shown on the return when filed, with the balance of tax payable in the following quarter. -May defer payment of tax for up to 9 months following the due date of the return.

-Must comply with the Code provisions regarding installment payments of estimated income tax by corporations.

To qualify as an exempt organization, the applicant -Cannot be exclusively a social club. -Must fall into one of the specific classes upon which exemption is conferred by the Internal Revenue Code. -Cannot, under any circumstances, be a foreign corporation. -Cannot, under any circumstances, engage in lobbying activities.

-Must fall into one of the specific classes upon which exemption is conferred by the Internal Revenue Code.

To qualify as an exempt organization other than an employees' qualified pension or profit-sharing trust, an organization -Must file a written application with the IRS. -Need not be specifically identified as one of the classes on which exemption is conferred by the Internal Revenue Code, provided that the organization's purposes and activities are of a nonprofit nature. -Cannot operate under the "lodge system" under which payments are made to its members for sick benefits. -Is barred from incorporating and issuing capital stock.

-Must file a written application with the IRS.

What statement is false concerning organizations required to file a Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ? -Must provide confirmation that receipts are less than $100,000. -Must provide web address of organization. -Must provide any names used by the organization. -Must provide name of principal officer.

-Must provide confirmation that receipts are less than $100,000.

Which of the following activities regularly conducted by a tax-exempt organization will result in unrelated business taxable income? 1. Selling articles made by handicapped persons as part of their rehabilitation, when the organization is involved exclusively in their rehabilitation 2. Operating a grocery store almost fully staffed by emotionally handicapped persons as part of a therapeutic program -Both 1 and 2. -1 only. -2 only. -Neither 1 or 2.

-Neither 1 or 2.

During the current year, Help, Inc., an exempt organization, derived income of $15,000 from conducting bingo games. Conducting bingo games is legal in Help's locality and is confined to exempt organizations in Help's state. Which of the following statements is true regarding this income? -Since Help has unrelated business taxable income, Help automatically forfeits its exempt status for the current year. -The entire $15,000 is exempt from tax on unrelated business taxable income. -The entire $15,000 is subject to tax at a lower rate than the corporate income tax rate. -Only the first $5,000 is exempt from tax on unrelated business taxable income.

-The entire $15,000 is exempt from tax on unrelated business taxable income.

Which of the following activities regularly carried out by an exempt organization will NOT result in unrelated business taxable income? -The sale by a trade association of publications used as course materials for the association's seminars, which are oriented toward its members. -Accounting and tax services performed by a local chapter of a labor union from its members. -The sale of laundry services by an exempt hospital to other hospitals. -The sale of heavy duty appliances to senior citizens by an exempt senior citizens center.

-The sale by a trade association of publications used as course materials for the association's seminars, which are oriented toward its members.

Which of the following statements regarding unrelated business taxable income (UBTI) is true? -UBTI includes income derived from services preformed by unpaid volunteers. -UBTI is subject to tax at the corporate income tax rate. -UBTI is exempt from tax on condition that no part of it inures to the benefit of any shareholder/trustee, officer, or employee of the exempt organization. -UBTI does not include income from business activity not substantially related to the exempt purpose of the organization if the activity is not regularly carried on.

-UBTI does not include income from business activity not substantially related to the exempt purpose of the organization if the activity is not regularly carried on.