Solved by verified expert :1692. CHAPTER
15—EXEMPT ENTITIES Question MC #13
Which of the
following statements regarding a private foundation is not correct?
a.
Only certain exempt organizations are classified as private foundations.
b. A donor who makes a contribution to a
private foundation has identical tax consequences as a donor who makes a
contribution to a public charity.
c. A private foundation may be subject
to certain excise taxes because it is a private foundation.
d. A church is not a private foundation.
e. All of the statements are correct.
1693. CHAPTER
15—EXEMPT ENTITIES Question MC #14
Blue, Inc., receives its support from the following sources.
Governmental unit A, for services rendered
$18,000
General public, for services rendered
45,000
Gross investment income
8,000
Contributions from individual substantial
contributors (disqualified persons)
40,000
Which of the following statements is correct?
a.
Blue, Inc., is a private foundation because it satisfies the external support
test and fails the internal support test.
b. Blue, Inc., is not a private foundation because it fails both the internal and
external support tests.
c. Blue, Inc., is a private foundation
because it satisfies both the external support test and the internal support
test.
d. Blue, Inc., is not a private foundation because it satisfies both the external
support test and the internal support test.
e. None of the statements is true.
1694. CHAPTER
15—EXEMPT ENTITIES Question MC #15
Which of the following statements is correct?
a.
A private foundation is, in general, exempt from Federal income tax.
b. A private foundation may be subject
to certain types of Federal income tax.
c. If a broad public support test is
satisfied, an exempt organization that otherwise would be classified as a
private foundation is not classified
as a private foundation.
d. Only b. and c. are correct.
e. a., b., and c. are correct.
1695. CHAPTER
15—EXEMPT ENTITIES Question MC #16
An exempt organization can avoid classification as a private foundation if it
is broadly publicly supported. To be broadly publicly supported, which of the
following is required?
a.
The exempt organization does not receive support from a feeder organization.
b. An external support test is
satisfied.
c. An internal support test is
satisfied.
d. Only b. and c. must be satisfied.
e. a., b., and c. must be satisfied.
1696. CHAPTER
15—EXEMPT ENTITIES Question MC #17
Which of the following taxes that are imposed on private foundations is,
effectively, an audit fee to defray IRS expenses?
a.
Tax on self-dealing.
b. Tax on failure to distribute income.
c. Tax on excess business holdings.
d. Only a. and c.
e. None of the above.
1697. CHAPTER
15—EXEMPT ENTITIES Question MC #18
Which of the following is not an
excise tax that may be imposed on a private foundation?
a.
Tax on jeopardizing investments.
b. Tax on self-dealing.
c. Tax on excessive foundation manager
compensation.
d. Tax on excess business holdings.
e. All of these taxes may be imposed on
a private foundation.
1698. CHAPTER
15—EXEMPT ENTITIES Question MC #19
Which of the following excise taxes are imposed on the private foundation
because it engages in prohibited transactions?
a.
Tax on investment income.
b. Tax on self-dealing.
c. Tax on failure to distribute income.
d. Only b. and c.
e. a., b., and c.
1699. CHAPTER
15—EXEMPT ENTITIES Question MC #20
Teal, Inc., is a private foundation which failed to distribute an adequate
amount of income for the exempt purpose of Teal. Which of the following
statements is correct?
a.
An excise tax in the form of an initial tax at the rate of 5% may be imposed on
Teal.
b. An excise tax in the form of an
initial tax at the rate of 2.5% may be imposed on the foundation manager.
c. An excise tax in the form of an
additional tax at the rate of 100% may be imposed on Teal.
d. An excise tax in the form of an
additional tax at the rate of 50% may be imposed on the foundation manager.
e. None of the statements is correct.
1700. CHAPTER
15—EXEMPT ENTITIES Question MC #21
Which of the following statements is not
correct?
a.
The unrelated business income tax (UBIT) does not apply to exempt organizations that receive broad public
support.
b. The unrelated business income tax
(UBIT) treats the tax-exempt entity as if it were subject to the corporate
income tax on its unrelated business income.
c. Unrelated business income is income
derived from activities not related
to the exempt purpose of the exempt organization.
d. Only a. and c. are not correct.
e. a., b., and c. are not correct
1701. CHAPTER
15—EXEMPT ENTITIES Question MC #22
Which of the
following requirements are among the three requirements that must be satisfied
for an exempt organization to be subject to the unrelated business income tax?
a.
The exempt organization conducts a trade or business.
b. The trade or business is not
substantially related to the exempt purpose of the organization.
c. The trade or business normally
generates an annual profit of not greater than $25,000.
d. Only a. and b.
e. a., b., and c.
1702. CHAPTER
15—EXEMPT ENTITIES Question MC #23
Third Church operates a gift shop in its parish house. The total income of the
church is $800,000. Of this amount, $300,000 comes from offerings and $500,000
comes from the net income of the gift shop. The gift shop operations are
conducted by one full-time employee (the manager) and 50 volunteers. None of
the volunteers works more than 15 hours per week. Which of the following
statements is correct?
a.
The $800,000 is unrelated business income.
b. The $500,000 of gift shop net income
is unrelated business income.
c. The $300,000 is unrelated business
income because the gift shop is a feeder organization.
d. None of the $800,000 is unrelated
business income.
e. The unrelated business income tax
does not apply to churches.
1703. CHAPTER
15—EXEMPT ENTITIES Question MC #24
Relevant factors in the unrelated business income tax (UBIT) rules for
determining whether a trade or business is regularly
carried on by an exempt organization do not include which of the following?
a.
The proportion of the total revenue of the exempt organization raised by the
activity.
b. The frequency of the activity.
c. The continuity of the activity.
d. The manner in which the activity is
pursued.
e. All of the above are relevant
factors.
