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Chapter 15 - Not-for-Profit Organizations—Regulatory, Taxation, and Perform Chapter 15 Not-for-Profit Organizations—Regulatory, Taxation, and Perform True / False Questions 1. A state has the obligation to monitor and regulate a not-for-profit (NPO) organization because it granted the NPO tax-exempt status through the not-for-profit corporation laws. True False 2. The federal government's primary objective in regulating not-for-profit organizations through the income tax laws is to limit the number of exempt organizations that operate at any one point in time. True False 3. Not-for-profit corporations cannot lobby or attempt to influence legislation or politicians. True False 4. The not-for-profit organization applying for tax-exempt status determines the appropriate subsection under IRC Sec. 501 for which it wants to be considered and the Internal Revenue Service then approves or does not approve the application. True False 5. The unrelated business income tax could be a significant cost and therefore should be of concern to tax-exempt organizations. True False 6. Intermediate sanctions are often imposed by the Internal Revenue Service, in addition to revoking the tax-exempt status for organizations that confer excessive economic benefits on persons with substantial influence over the organization. True False 15-1
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Chapter 15 - Not-for-Profit Organizations—Regulatory, Taxation, and Perform 7. If a tax-exempt organization dissolves and goes out of business, it must distribute its assets to another tax-exempt organization. True False 8. Board members of a not-for-profit organization have a fiduciary responsibility to provide fiscal guidance and ongoing governance over the not-for-profit organization to ensure that its exempt mission is carried out as described in the incorporating documents and exempt application. True False 9. All officers of a not-for-profit organization have the same responsibilities to the organization and its constituents. True False 10. Not-for-profit organizations are so diverse in nature that it is not feasible to find benchmarks with which to compare their financial and operating performance. True False 11. Performance measures that can be used to evaluate not-for-profit organizations include percentage of total expenses spent on the programs versus on supporting the programs and total dollars raised for fund-raising dollars spent. True False 12. Not-for-profit organizations risk loss of their tax-exempt status if they engage in any political activity. True False 15-2
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