Chapter 23 - Multiple choice

Chapter 23 - Multiple choice - MULTIPLE CHOICE 1 Which of...

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MULTIPLE CHOICE 1. Which of the following qualify as exempt organizations? a. Federal and related agencies. b. Religious, charitable, and educational organizations. c. Civic leagues. d. Social clubs. e. All of the above can be exempt from tax. ANS: E REF: Exhibit 23-1 2. Which of the following are exempt organizations? a. National Collegiate Athletic Association (NCAA). b. American Bankers Association (ABA). c. Professional Golfers Association (PGA). d. Only a and c e. a, b, and c ANS: E REF: Exhibit 23-1 3. Which of the following is not an example of an exempt organization? a. Religious, charitable, or educational organization. b. Voluntary employees’ beneficiary association. c. Labor, agricultural, or horticultural organization. d. Stock exchange. e. All of the above can be exempt from tax. ANS: D REF: Exhibit 23-1 4. Which of the following are organizations exempt under § 501(c)(3)? a. Girl Scouts of America. b. Washington and Lee University. c. League of Women Voters. d. Only a and b are § 501(c)(3) organizations. e. All of the above are § 501(c)(3) organizations. ANS: D The League of Women Voters is exempt under § 501(c)(4) (i.e., a civic league). PTS: 1 REF: Exhibit 23-1 5. Which of the following attributes are associated with exempt organizations? a. Organization serves some type of common good. b. Organization is not a for profit entity. c. Net earnings do not benefit the members of the organization. d. Organization does not exert political influence. e. All of the statements are true.
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ANS: E These characteristics tend to permeate the definitional requirements of many types of exempt organizations. PTS: 1 REF: p. 23-5 6. Garden, Inc., a qualifying § 501(c)(3) organization, incurs lobbying expenditures of $210,000 during the taxable year. Exempt purpose expenditures are $900,000. If Garden makes the election under § 501(h) to make lobbying expenditures on a limited basis, its tax liability resulting from the lobbying expenditures is: a. $0. b. $12,500. c. $50,000. d. $60,000. e. None of the above. ANS: B The lobbying nontaxable amount is $160,000 [($500,000 × 20%) + ($400,000 × 15%)]. Therefore, the ceiling on lobbying expenditures is $240,000 ($160,000 × 150%). Since Garden did not exceed the ceiling, the tax imposed is only on the amount of the lobbying expenditures in excess of $160,000 ($210,000 – $160,000 = $50,000). The tax is imposed at a rate of 25%. Thus, the tax liability is $12,500 ($50,000 × 25%). PTS: 1 REF: p. 23-8 | p. 23-9 | Figure 23-1 7. Which of the following statements is correct? a. Exempt organizations cannot engage in significant levels of lobbying activities. b. Certain exempt organizations can elect to engage in lobbying activities on a limited basis. c.
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Chapter 23 - Multiple choice - MULTIPLE CHOICE 1 Which of...

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