R6 - Tax-Exempt Organizations Flashcards

1
Q

Types of TE Orgs

A
  1. Sec 501(c)(1)
  2. Sec 501(c)(2)
  3. Sec 501(c)(3)
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2
Q

SEc 501(c)(1)

A

Ex: Credit Union

  • Organized under Congress
  • Does not need to make a written application to be TE
  • Does not have an annual requirement to file
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3
Q

SEc 501(c)(2)

A

Ex: HoldCo for exempt orgs

  • It’s a holding company for a TE org.
  • Collects money from the property held and returns net income to TE org.
  • Must file Form 1024 to apply for TE status.
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4
Q

SEc 501(c)(3) - THE IMPORTANT ONE!!!!!

A

Ex: Public charities/Private Foundations

- Must file Form 1023 to apply for TE status AND be approved by the IRS.

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5
Q

Requirements for TE status

A
  • No part of earnings may benefit a private SH or individual.
  • A substantial part of the activities may not be nonexempt activities (propaganda, influence law)
  • Org may not directly participate or intervene in political campaigns.
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6
Q

Sec 509 Private Foundations - Exclusions

A
  • Max 60% charitable deduction donees.
  • Receives >1/3 of their annual income from the public and <1/3 from investment income and UBI.
  • Supporting orgs.
  • DPS testing orgs
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7
Q

Sec 509 Private Foundations - Filing Requirements

A
  • Form 990-PF (information return)
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8
Q

Sec 509 Private Foundations - Terminations

A
  • Involuntary Termination: When PF becomes a public charity.
  • Voluntary Termination: By notifying IRS.
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9
Q

UBI = Taxable

A

Ex. College bookstore/Cafeteria

  • Derived from trade or business
  • Regular
  • Not related to TE purpose.
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10
Q

UBI - Exclusions

A
  • Bingo games/Games of Chance
  • Activity conducted for the convenience of org members.
  • Trade show.
  • Exchange or rental of membership lists.
  • Sale of items received as contributions (Goodwill).
  • Sale of articles made by disabled persons (art with feet).
  • When work is performed by unpaid volunteers.
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11
Q

Taxation of UBI

A
  • Form 990-T
  • Exemption: $1,000
  • Separate calc of each UBI
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12
Q

Excluded types of income

A
  • Dividend, interest
  • Royalties
  • Rents
  • Income from research
  • Gains and losses of dispositions of property (not for sale)
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13
Q

Membership Organizations

A
  • Social Clubs, HOAs.
  • Deductions to the extent of TE activity.
  • If makes a profit, it is taxable.
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14
Q

Feeder Org

A
  • Taxed on its entire income.
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15
Q

Annual Filing Requirement

A
  • Form 990, due by May 15.

- Form 990-EZ is gross receipts are>$200K and total assets are >$500K

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16
Q

Exceptions to 990 - CHRIST

A
  • Churches
  • High schools - religious
  • Religious orders
  • Internal Support Orgs
  • Societies - Missionary related
  • TE orgs by gov
17
Q

990-EZ

A
  • Orgs that have less than $50K gross receipts
18
Q

Penalties = 3 strikes or your out.

A
  • When org doesn’t file return for 3 consecutive years, TE statues is automatically revoked as of the 3rd year due date.
19
Q

Retaining TE Status

A

Avoid:

  • Operate for the benefit of private interests.
  • Devote activities to law influence.
  • Participate in political campaign.
  • Conduct illegal activities.
20
Q

Resuming TE Status after Revocation

A
  • Must file an application
  • May choose that reinstatement be retroactive to the effective date of revocation.
  • Within 15 mo must complete one or more of:
    a. File all required docs (Form 1023/1024)
    b. File annual returns.
    c. Submit a statement citing reasonable cause.