R3 M7 - Tax Exempt Organization Overview

Question 1

What is the characteristic of a 501 (c)(3) private foundation, rather than a 501 (c)(3) public charity?

Answer 1

• 501 (c) (3) private foundation makes grants to other charitable organizations and individuals rather than directly operating charitable programs
• The private foundation receives private donation from single major source and corporation rather than public support from government unit and general public.

Question 2

List of tax-exempt organizations:

Answer 2

• Labor, agricultural, horticulture
• Civic leagues and Social Welfare organizations
• Veterans’ organizations
• Organization that hold title to an exempt organization’s property
• Cemetry organizations
• Mutual Insurance

Question 3

Question 4

What is Section 501 (c)(3) public charities?

Answer 4

-Organizations that test product for public safety
- Churches, colleges, universities, hospital, medical research that are publicly supported
- Publicly supported organizations with limited investment income or unrelated business income
- Not-for-profit organizations that support public charities

Question 5

Which of the following types of organizations are classified as Section 501(c)(3) public charities?

A.	Civic leagues and social welfare organizations

B.	Organizations that hold title to an exempt organization’s property

C.	Labor, agricultural, and horticultural organizations

D.	Organizations that test consumer products for public safety

Answer 5

Explanation
Choice “D” is correct. Organizations that test products for public safety are classified as 501(c)(3) public charities.

Choice “A” is incorrect. Civic leagues and social welfare organizations are tax-exempt organizations, but they are not 501(c)(3) public charities.

Choice “B” is incorrect. Organizations that hold title to an exempt organization’s property, collect the income from the property, and distribute it to the exempt organization are tax-exempt organizations, but they are not 501(c)(3) public charities.

Choice “C” is incorrect. Labor, agricultural, and horticultural organizations are tax-exempt organizations, but they are not 501(c)(3) public charities.