Tax Exempt Entities

Question 1

Tax Exempt Organization

Answer 1

INCLUDES:
charities, labor orgs, social clubs, pension nd profit-sharing trusts, political orgs, and private foundations

may be in the form of a corp or trust and MUST APPLY AND RECEIVE an exemption from taxation (FORM 1023 or FORM 1024)

Question 2

Prohibited Activities

Answer 2

• Influencing legislation; or political parties (exception does not apply to churches or pf) election made

Question 3

Unrelated Business Income

Answer 3

EO is taxed on this

UBI =

• from business regularly carried on AND
• not substantially related to the EO purposes

***income from advertising in journals

Pay tax if exceeds $1,000

Question 4

Filing Requirements

Answer 4

EO must file information return (FORM 990) IF gross receipts exceed $50,000 - reporting income, expenses, and substantial contributors

990-EZ can be used unless gross receipts exceed 200k or total assets exceed 500k

NOT required to file 990/990-EZ …MUST file 990-N; a notice each year

CHURCHES DO NOT FILE 990 OR 990-N

Question 5

Filing Requirements

Answer 5

EO must file information return (FORM 990) IF gross receipts exceed $50,000 - reporting income, expenses, and substantial contributors

990-EZ can be used unless gross receipts exceed 200k or total assets exceed 500k

NOT required to file 990/990-EZ …MUST file 990-N; a notice each year

CHURCHES DO NOT FILE 990 OR 990-N

Question 6

Related Income

Answer 6

• activity where substantially all work performed for no compensation
• business carried on for convenience of students/members or charitable, religious, or spec. org
• sale of merch received as cont.
• in general, investment income***
• rents from real property***