R3 - Misc. Flashcards
What type of exempt organization is created by an act of Congress?
Section 501(c)(1) corporations
What type of exempt organization is organized for an exclusive purpose to hold title to property, collect income from the property, and turn over the NI to an exempt organization?
Section 501(c)(2) corprations
What is defined as the gross income from any unrelated trade or business “regularly” carried on, minus business deductions directly connected therewith?
UBI (unrelated business income)
Does UBI (unrelated business income) include any activity where all of the work is performed by unpaid workers (volunteers)?>
NO
Only UBI (unrelated business income) in excess of what amount is subject to tax?
$1,000
What is the annual return requirement for exempt organizations?
File an annual information return (Form 990)
Does the following type of organization qualify as an organization exempt from income tax?
A social club organized and operated exclusively for the pleasure and recreation of its members, supported solely by membership fees, dues, and assessments
YES
Does the following type of organization qualify as an organization exempt from income tax?
All “feeder” organizations, primarily conducting business for profit, but distributing 100% of their profits to organizations exempt from income tax
NO
EXPLANATION: An organization operated primarily for the purpose of carrying out a trade or business for profit cannot claim tax exemption on the ground that all its profits are payable to exempt organizations. It must rely on its own activities of an exempt nature to gain tax exemption. A feeder organization is taxable on its entire income, not just the portion it designates as its unrelated business income.
True or false.
An incorporated exempt organization subject to tax on its unrelated business income must comply with code provisions regarding installment payments of estimated income tax by corporations.
True
The private foundation status of an exempt organization will terminate if it becomes what?
A public (50% type) charity
If a tax penalty is included in book income, what must be done to arrive at taxable income?
Add back to book income to arrive at taxable income
True or false.
Proceeds of life insurance policies, if paid by reason of the death of the insured, are included in taxable income of the recipient.
False.
EXPLANATION: excludable from taxable income of the recipient
What is the impact on E&P?
Unrealized losses at the end of the year on securities owned
No effect
What is the impact on E&P?
Federal income taxes accrued and paid during the year
Decrease
What is the impact on E&P?
Gain on prior year installment sale recognized in the current year
Decrease
