Chapter 23- Tax Exempt Entities

Chapter 23- Tax Exempt Entities - CHAPTER 23 SOLUTIONS END...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 23 SOLUTIONS END OF CHAPTER QUESTIONS COVERED IN LECTURE – NOT COLLECTED : 7, 8, 9, 10, 11, 14, 15, 16, 17, 25, 26, 27, AND 29. 7. An exempt organization generally is exempt from Federal income taxes. In addition, an exempt organization may be exempt from state income taxes, state franchise taxes, sales taxes, or property taxes. They may also receive discounts on postage rates. However, exempt organizations may be subject to Federal income taxes in the following situations. Engages in prohibited transactions. Is a feeder organization. Is a private foundation that is partially subject to income tax. Has income tax levied on unrelated business taxable income. Donors of property to an exempt organization may qualify for a charitable contribution deduction. However, not all exempt organizations are qualified charitable contribution recipients (e.g., NFL, PGA Tour, Underwriters Laboratories). p. 23-6, Concept Summary 23-2, and Exhibit 23-1 8. a. A § 501(c)(3) hospital is prohibited from participating in political campaigns. Doing so can result in the forfeiture of exempt status. However, the hospital could make a § 501(h) election which will enable it to lobby on a limited basis. b. A church is also prohibited from participating in political campaigns. Doing so can also result in the forfeiture of exempt status. A church is not eligible for a § 501(h) election. p. 23-7 and Footnote 14 9. Organizations exempt under § 501(c)(3) generally are limited from attempting to influence legislation (lobbying activities) or from participating in political campaigns. A violation can result in the forfeiture of exempt status. However, certain § 501(c)(3) organizations can elect to have their lobbying activities measured by an ‘‘expenditure’’ test. Other § 501(c)(3) organizations who cannot make a § 501(h) election lose their tax-exempt status if a substantial part of the organization’s activities consist of lobbying [‘‘no substantial part’’ test under § 501(c) (3)]. Amber apparently is eligible for and has elected to engage in lobbying activities on a limited basis or, if not eligible for the election, no substantial part of Amber’s activities consists of lobbying. Mauve either has exceeded the limitations on lobbying expenditures under the
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/07/2011 for the course ACCT 640 taught by Professor N/a during the Spring '11 term at Davenport.

Page1 / 3

Chapter 23- Tax Exempt Entities - CHAPTER 23 SOLUTIONS END...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online