1680. CHAPTER 15—EXEMPT ENTITIES Question MC #1 Which of the following qualify as exempt organizations? a. Federal and related agencies. b. Religious charitable and educational organizations. c. Civic leagues. d. Domestic fraternal societies (e.g. the Eagles Club). e. All of the above can be exempt from tax. 1681. CHAPTER 15—EXEMPT ENTITIES Question MC #2 Which of the following are exempt organizations to which contributions made are eligible for the charitable contribution deduction? a. National Basketball Association (NBA). b. Red Cross. c. American Institute of CPAs (AICPA). d. Only b. and c. e. a. b. and c. 1682. CHAPTER 15—EXEMPT ENTITIES Question MC #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. American Federation of Teachers (a teachers’ union). e. All of the above can be exempt from tax. 1683. CHAPTER 15—EXEMPT ENTITIES Question MC #4 Which of the following are organizations exempt under § 501(c)(3)? a. Girl Scouts of America. b. Washington and Lee University. c. Veterans of Foreign Wars (VFW). d. Only a. and b. are § 501(c)(3) organizations. e. All of the above are § 501(c)(3) organizations. 1684. CHAPTER 15—EXEMPT ENTITIES Question MC #5 Which of the following is a requirement for exempt status? a. The organization does not exert political influence. b. The organization has not been subject to intermediate sanctions for the past 24 months. c. The organization serves some type of common good. d. Only a. and c. e. a. b. and c. 1685. CHAPTER 15—EXEMPT ENTITIES Question MC #6 Rose Inc. a qualifying § 501(c)(3) organization incurs lobbying expenditures of $145 000 during the taxable year. Exempt purpose expenditures are $500 000. If Rose 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. $7 250. c. $11 250. d. $36 250. e. Some other amount. 1686. CHAPTER 15—EXEMPT ENTITIES Question MC #7 Which of the following statements is correct? a. No exempt organizations can engage in any lobbying activities. b. Certain exempt organizations can elect to engage in lobbying activities on a limited basis. c. Churches can engage in lobbying activities on an unlimited basis because of the separation of church and state provision. d. Only b. and c. are correct. e. Only a. and c. are correct. 1687. CHAPTER 15—EXEMPT ENTITIES Question MC #8 Which of the following are available options for the IRS in dealing with an exempt organization entering into prohibited transactions? a. Attempt to subject all or part of the organization’s income to Federal income tax. b. Revoke the exempt status of the organization. c. Impose intermediate sanctions in the form of excise taxes. d. Only a. and b. e. a. b. and c. 1688. CHAPTER 15—EXEMPT ENTITIES Question MC #9 Which of the following statements regarding intermediate sanctions is correct? a. Intermediate sanctions are self-assessing (i.e. calculated and paid by the taxpayer rather than being imposed by the IRS). b. The excise tax is imposed on the exempt organization and on disqualified persons. c. Both a first-level tax and a second-level tax may apply. d. The corporate tax rates apply in calculating the amount of the tax liability. e. None of the above is correct. 1689. CHAPTER 15—EXEMPT ENTITIES Question MC #10 Which of the following activities whose proceeds benefit an exempt organization are subject to the feeder organization rules? a. A weekly raffle operated by paid employees. b. A car wash operated on Saturdays by volunteers. c. A yard sale of donated clothes. d. A thrift shop run by volunteers. e. None of the above is subject to the feeder organization rules. 1690. CHAPTER 15—EXEMPT ENTITIES Question MC #11 Which of the following activities is not subject to the feeder organization rules? a. One hundred percent of the net income of the for-profit entity is contributed to the exempt organization. b. A trade or business where substantially all the work is performed by volunteers. c. A trade or business of selling merchandise where substantially all of the merchandise has been received as contributions or gifts. d. Only b. and c. e. a. b. and c. 1691. CHAPTER 15—EXEMPT ENTITIES Question MC #12 Which of the following types of § 501(c)(3) organizations are not private foundations? a. Hospitals. b. Churches. c. Colleges and universities. d. Only a. and b. e. a. b. and c.
