Exempt Organization Flashcards
1
Q
What are the requirements for a 501(c)3 organization?
A
- Organized and Operated exclusively for exempt purposes
- No earnings can benefit an individual or private shareholder
- Cannott attempt to influence legislation as a major part of its activities OR campaign politically
2
Q
What are the general requirement for a corporation to obtain tax exempt status?
A
- Make are a written application for exempt status within 15 months from the end of the month in which they were organized
- **be approved by the IRS **
- become **incorporated as a corporation or trust **
3
Q
Private foundation
A
- received at least 1/3 of the support from the general public and public charities
- may be subject to income tax based on investment income and
- status of exempt organization terminates when become a public charity
4
Q
Filing requirement
A
- Most exempt organization must file an annual information return Form 990
- *due by May 15**
- Unless : gross receipts is ≤ $50,000 OR Church
- **Disclose the total amount of contribution and identity of contributors **
5
Q
UBI - Unrelated Business Income
A
UBI is income from a business acitvity that is regularly carried on and is unrelated to the organization’s exempt purpose
6
Q
How is UBI taxed for an exempt organization?
A
UBI
- Expenses
**- $1,000 specific deduction **
= UBTI taxed at Corp or Trust tax rate
7
Q
The definition of UBI specifically excludes:
A
- Legal games of chance used to raise funds, such as bingo
- Activities only carried out on an intermittent basis, such as annual charity auctions
- Business activities related to the organization’s purpose, such as sales of educational materials to members of a professional organization established to maintain and improve the skills of its members
- Most investment income
- Activities that are staffed entirely by volunteers working without pay
- The sale of merchandise that was received as a gift or contribution
- Convenience of members, employees or students (ex: cafeteria or bookstore)
