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Strayer ACC 317 WK 11 Final Exam

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Question;ACC 317 WK 11 Final Exam;1. A church is one of the types of exempt organizations. True False;2. While the major objective of the Federal income tax law is to;raise revenue, social considerations and economic objectives also affect;the tax law. True False;3. All organizations that are exempt from Federal income tax are exempt under ? 501(c)(3). True False;4. An exempt entity in no circumstance is subject to Federal income tax. True False;5. An entity satisfies the ?not-for-profit? requirement for exempt;status if its total expenses for the year exceed its gross income. True False;6. If an organization qualifies for exempt status for Federal income tax purposes, it is exempt from all Federal income taxes. True False;7. 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. True False;8. The League of Women Voters is a ? 501(c)(3) organization. True False;9. 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. True False;10. An exempt organization that is eligible to elect under ? 501(h);to engage in lobbying activities on a limited basis incurs no tax;liability from lobbying, if the lobbying expenditures for the tax year;do not exceed the lobbying expenditures ceiling. True False;11. While certain ? 501(c)(3) organizations can elect to be permitted to lobby on a limited basis, churches are not eligible to make a ? 501(h) election. True False;12. An intermediate sanction imposed by the IRS on an exempt;organization is a greater sanction than revocation of exempt status. True False;13. If an exempt organization owns a feeder organization, the exempt;organization is taxed on the profits of the feeder organization under;the unrelated business income tax (UBIT) rules. True False;14. A feeder organization is exempt from Federal income taxation;because it carries on a trade or business for the benefit of an exempt;organization and remits its profits to the exempt entity. True False;15. Theater, Inc., an exempt organization, owns a printing company;Printers, Inc., which remits 85% of its profits (i.e., taxable income of;$100,000) to Theater, Inc. Since Printers remits at least 85% of its;profits to Theater, neither Theater, Inc., nor Printers, Inc., must pay;income tax on this $85,000 ($100,000 ? 85%). True False;16. An educational organization such as the College of William and;Mary that is exempt under ? 501(c)(3) cannot be classified as a private;foundation if its only sources of revenue are from tuition and alumni;contributions. True False;17. The tax consequences to a donor of making a charitable;contribution to an exempt organization classified as a private;foundation may be less favorable than the tax consequences to a donor of;making a charitable contribution to an exempt organization that is not;classified as a private foundation. True False;18. Exempt organizations which are appropriately classified as;private foundations include churches, educational institutions, and;charitable organizations receiving a major portion of their support from;the general public or the U.S., a state, or a political subdivision;thereof. True False;19. To satisfy the broadly supported provision to avoid;classification as a private foundation, the exempt organization must;satisfy both an external support test and an internal support test.;Under the internal support test, more than one-third of the exempt;organization?s support for the taxable year must come from gross;investment income and unrelated business taxable income. True False;20. The excise taxes such as the tax on self-dealing and the tax on;excess business holdings are imposed on exempt organizations classified;as private foundations and are not imposed on exempt organizations;classified as public charities. True False;21. The excise tax imposed on a private foundation?s excess business holdings is in effect an audit fee to defray IRS expenses. True False;22. The purpose of the excise tax imposed on a private foundation for;failure to distribute sufficient levels of income is to motivate the;foundation to distribute more of its income for application to exempt;purposes and thus be classified as a feeder organization. True False;23. The excise tax imposed on a private foundation?s investment;income can be imposed as an initial (first-level) tax but cannot be;imposed as an additional (second-level) tax. True False;24. 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. True False;25. The excise tax that is imposed on private foundations for making;jeopardizing investments is imposed because the foundation has made;speculative investments that put the foundation?s income at risk. True False;26. The general objective of the tax on unrelated business income is;to tax such income as if the entity were a taxable corporation. True False;27. Federal agencies exempt from Federal income tax under ? 501(c)(1) are not subject to the unrelated business income tax (UBIT). True False;28. A trade or business that is operated by an exempt organization;which otherwise would be subject to the tax on unrelated business income;is exempt from tax, if the profits generated by the trade or business;are used by the exempt organization for exempt purposes. True False;29. An activity is not an unrelated trade or business for purposes of the unrelated business income tax (UBIT) unless it is profitable. True False;30. A profit-related activity of an exempt organization avoids the;unrelated business income tax if greater than 50% of the merchandise;sold had been received as a contribution. True False;31. If an exempt organization conducts a trade or business that is;regularly carried on by the organization, it is subject to the unrelated;business income tax (UBIT). True False;32. An exempt organization that otherwise would be classified as an unrelated trade or businesses will not;be subject to the unrelated business income tax if the individuals;performing substantially all the work of the trade or business do so;without compensation. True False;33. A corporate payment to an exempt organization that qualifies as a;qualified sponsorship payment is not subject to the unrelated business;income tax (UBIT). True False;34. The income from a bingo game or a casino game conducted by an exempt organization may be unrelated business income. True False;35. The key factors in determining whether an exempt entity?s income;from a bingo game is unrelated trade or business income are whether;substantially all the work is performed by volunteers and all of the;prizes to be awarded are received as donations. True False;36. An exempt organization is located in the state of Nevada.;Gambling in Nevada is legal. Therefore, bingo games are conducted by;both taxable and tax-exempt organizations. If the net earnings from the;bingo games are less than $25,000, the exempt organization is not subject to the unrelated business income tax (UBIT). True False;37. Revenue generated by an exempt organization from the distribution of low-cost items is not income from an unrelated trade or business. True False;38. The activity of exchanging with or renting to other exempt;organizations the exempt organization?s donor or membership list is not;an unrelated trade or business. True False;39. 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). True False;40. In calculating unrelated business taxable income, the exempt;organization is permitted to deduct only the charitable contributions;associated with the unrelated trade or business. True False;41. Unrelated debt-financed income, net of the unrelated;debt-financed deductions, is subject to the unrelated business income;tax only if the exempt organization is a private foundation. True False;42. Personal property rental income is subject to and real property rental income is not subject to the unrelated business income tax. True False;43. If personal property is leased with real property and more than;45% of the rent income under the lease is from personal property, all of;the rent income is subject to the unrelated business income tax. True False;44. If the unrelated business income of an exempt organization is;$20,000 or less, the unrelated business income tax (UBIT) will be $0. True False;45. For purposes of the unrelated business income tax, debt-financed;property is all property of the exempt organization that is held to;produce income and on which there is acquisition indebtedness. True False;46. Even though a church is exempt under ? 501(c)(3), it is required to obtain IRS approval for its exempt status. True False

 

Paper#39237 | Written in 18-Jul-2015

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