Tax exempt organization

Question 1

not subject to an accumulated earnings tax

Answer 1

Private foundations

Question 2

Private foundations may be subject to several taxes such as

Answer 2

• Tax on investment income
• Tax on self-dealing
• Tax on failure to distribute income for exempt purposes
• Tax on excess business holdings
• Tax on speculative investments that jeopardize the foundation’s assets
• Tax on expenditures that should not be made by private foundations

Question 3

The organizational test to qualify a public service charitable entity as tax exempt requires the articles of organization to:

Answer 3

limit the purpose of the entity to the charitable purpose.

Question 4

Organizations with less than $25,000 gross receipts per year are required to file an

Answer 4

annual notice with the IRS that includes the organization’s legal name, address, and other basic information.

Question 5

If a tax-exempt organization is a trust, and its unrelated business income is taxed, what tax rates are used?

Answer 5

Tax rates for trusts

Question 6

Tax-exempt organizations are not taxed on investment income derived from investments that are accepted as proper sources of income for a charity or trust. What types of income would be taxable income for a nonprofit?

Answer 6

Rent from a debt-financed building

Question 7

Nontaxable income includes

Answer 7

dividends and interest, royalties and capital gains, and other rental income (not financed by debt).

Question 8

To qualify as an exempt organization, the applicant:

Answer 8

must not be a private foundation organized and operated exclusively to influence legislation pertaining to protection of the environment.

Question 9

Unrelated business income of an exempt organization does not include

Answer 9

any activity where all the work is performed for the organization by unpaid volunteers.

Question 10

tax-exempt organizations are subject to tax on income from any

Answer 10

unrelated business (income from sale of goods or services rendered).

Question 11

. Most other tax-exempt organizations are required to file annual information returns only if their gross receipts exceed a specified level. That level is

Answer 11

$25,000

Question 12

All private foundations must file

Answer 12

annual information returns with the IRS

Question 13

organizations that are exempt from filing Form 990

Answer 13

Churches and other religious organizations