ch23 - 1. All bona-fide churches generally are exempt from...

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1. All bona-fide churches generally are exempt from Federal income tax. *a. True b. False 2. While the major objective of the Federal income tax law is to raise revenue, social considerations and economic objectives also affect the tax law. *a. True b. False 3. Qualified state tuition programs are exempt from Federal income tax under § 501(c)(3). a. True *b. False 4. An exempt entity in no circumstance is subject to Federal income tax. a. True *b. False 5. An organization that is a for-profit entity can partially qualify for exempt status. a. True *b. False 6. If an organization qualifies for exempt status for Federal income tax purposes, it is exempt from all Federal income taxes. a. True *b. False 7. Engaging in a prohibited transaction can result in an exempt organization being subject to Federal income tax, but cannot cause it to lose its exempt status unless the exempt organization repeats the prohibited transaction. a. True *b. False 8. The League of Women Voters is a § 501(c)(3) organization. a. True
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*b. False 9. George is running for mayor of Culpepper. The members of Third Church adamantly oppose his candidacy. They would like to run a political advertisement in the local newspaper opposing his candidacy. The newspaper ad would have no effect on Third Church’s exempt status because the ad opposes George; it does not support his opponent. a. True *b. False 10. An exempt organization that is eligible to elect under § 501(h) to engage in lobbying activities on a limited basis incurs no tax liability from lobbying, if the lobbying expenditures for the tax year do not exceed the lobbying expenditures ceiling. a. True *b. False 11. A § 501(c)(5) labor organization is prohibited from lobbying for or against the passage of legislation. a. True *b. False 12. An intermediate sanction imposed by the IRS on an exempt organization is a lesser sanction than revocation of exempt status. *a. True b. False 13. If an exempt organization owns a feeder organization, the exempt organization is not taxed on the profits of the feeder organization under the unrelated business income tax (UBIT) rules. *a. True b. False 14. A feeder organization is exempt from Federal income taxation because it carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt entity. a. True *b. False 15. Theater, Inc., an exempt organization, owns a printing company, Printers, Inc., which remits 85% of its profits (i.e., taxable income
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of $100,000) to Theater, Inc. Since Printers remits at least 85% of its profits to Theater, neither Theater, Inc., nor Printers, Inc., must pay income tax on this $85,000 ($100,000 ´ 85%). a. True *b. False 16. An educational organization such as the College of William and Mary that is exempt under § 501(c)(3) cannot be classified as a private foundation. *a. True
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This note was uploaded on 04/02/2012 for the course ECON 101 taught by Professor Sing during the Spring '12 term at CUNY Hunter.

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ch23 - 1. All bona-fide churches generally are exempt from...

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