Solved by verified expert :1733. CHAPTER
15—EXEMPT ENTITIES Question PR #8
Orange, Inc., a private foundation, engages in a transaction with a
disqualified person in the amount of $800,000. Calculate the tax on
self-dealing. Assume that corrective action is taken so that the additional tax
does not apply.
1734. CHAPTER
15—EXEMPT ENTITIES Question PR #9
Well, Inc., a private foundation, makes a speculative investment of $750,000
that puts the foundation assets at risk. Calculate the tax on jeopardizing investments.
Assume that corrective action is taken so that the additional tax does not
apply.
1735. CHAPTER
15—EXEMPT ENTITIES Question PR #10
Wonder, Inc., a § 501(c)(3) exempt organization, acquired all the stock of a
for-profit corporation for $100,000. Wonder is a private foundation. The
acquired corporation was not a related business. Calculate the tax on excess
business holdings. Assume that corrective action is taken so that the
additional tax does not apply.
1736. CHAPTER
15—EXEMPT ENTITIES Question PR #11
Warmth, Inc., a private foundation, makes an expenditure of $800,000 that
should not be made by a private foundation. Calculate the tax on taxable
expenditures. Assume that corrective action is taken so that the additional tax
does not apply.
.
1737. CHAPTER
15—EXEMPT ENTITIES Question PR #12
First Americans, Inc., a § 501(c)(3) organization, operates a museum which
depicts the lives of a tribe of Native Americans. It charges an admission fee,
but also finances its operations through endowment income, contributions, and
gift shop sales. The gift shop is operated by 50 volunteers and the museum is
operated by 15 employees. Revenue by source is:
Admission fees
$700,000
Endowment income
75,000
Gift shop net income
300,000
Contributions
100,000
a.
Determine the amount of First Americans’ unrelated business
income.
b.
Determine the amount of First American’s unrelated business
income tax (UBIT).
1738. CHAPTER
15—EXEMPT ENTITIES Question PR #13
Radio, Inc., an exempt organization, trains disabled individuals to be radio
announcers. Rather than hold a traditional graduation exercise, the graduates
compete in a radio announcer contest. Such activities are held four times each
year. An admission fee of $10 is charged to the general public to attend the
contest. Eight hundred people attended the contest this year, and prizes of
$2,000 were given to the top 3 graduates. Calculate the amount of Radio’s
unrelated business income from this activity.
1739. CHAPTER
15—EXEMPT ENTITIES Question PR #14
The Dispensary is a pharmacy that is part of a § 501(c)(3) hospital. Its
primary mission is to dispense medicines for hospital patients. In addition,
the pharmacy dispenses medicines to former hospital patients for a period of up
to 30 days after discharge from the hospital. It does this for the dual purpose
of convenience to the former patients (i.e., the closest pharmacy is 6 miles
away), and to ensure that the former patients receive the medicines that have
been prescribed for them.
The Dispensary carefully carries out the policy of the hospital board that no
more than 20% of its gross revenues come from former-patient medicine sales. If
necessary, in December of each year, sales to former patients are curtailed to
assure compliance with this policy. Sales revenue from each of the two sources
is as follows for 2011.
Medicine dispensed to hospital patients
$800,000
Medicine sales to former patients
100,000
Calculate the amount of The Dispensary’s unrelated business gross income.
