Podcast
Questions and Answers
A charitable, religious, or scientific organization is presumed to be a private foundation if it meets which of the following conditions?
A charitable, religious, or scientific organization is presumed to be a private foundation if it meets which of the following conditions?
- Has gross receipts under $5,000 and notifies the IRS on Form 1023 within 27 months from the end of the month in which it was organized.
- Has gross receipts over $5,000 and notifies the IRS on Form 1023 within 27 months from the end of the month in which it was organized. (correct)
- Has gross receipts over $5,000 and does not notify the IRS on Form 1023 within 27 months from the end of the month in which it was organized.
- Has gross receipts under $5,000 and does not notify the IRS on Form 1023 within 27 months from the end of the month in which it was organized.
Which of the following organizations is NOT eligible for a charitable deduction for a contribution?
Which of the following organizations is NOT eligible for a charitable deduction for a contribution?
- A cemetery company that operates exclusively for the benefit of its members. (correct)
- A childcare organization.
- A cooperative hospital service organization.
- A corporation organized under an Act of Congress.
What form must a non-exempt charitable trust file if its gross receipts during the year were less than $200,000 and its total assets at the end of the year were less than $500,000?
What form must a non-exempt charitable trust file if its gross receipts during the year were less than $200,000 and its total assets at the end of the year were less than $500,000?
- Form 990-EZ (correct)
- Form 990
- Form 1023
- Letter with required information
What form is required for a qualified pension trust to apply for exemption?
What form is required for a qualified pension trust to apply for exemption?
Which of the following is NOT a requirement for claiming a charitable deduction for contributions to an organization?
Which of the following is NOT a requirement for claiming a charitable deduction for contributions to an organization?
What is unrelated business taxable income (UBTI)?
What is unrelated business taxable income (UBTI)?
Which of the following is NOT a characteristic of UBTI?
Which of the following is NOT a characteristic of UBTI?
A tax-exempt organization is required to file a UBTI tax return (Form 990-T) if its:
A tax-exempt organization is required to file a UBTI tax return (Form 990-T) if its:
Which of the following activities is MOST LIKELY to result in unrelated business taxable income for a tax-exempt organization?
Which of the following activities is MOST LIKELY to result in unrelated business taxable income for a tax-exempt organization?
A tax-exempt organization's gross income from an unrelated business is $900. Which of the following statements is true?
A tax-exempt organization's gross income from an unrelated business is $900. Which of the following statements is true?
Which of the following activities would NOT generate unrelated business taxable income for a tax-exempt organization?
Which of the following activities would NOT generate unrelated business taxable income for a tax-exempt organization?
A social club will lose its exempt status if:
A social club will lose its exempt status if:
An exempt scientific research organization has elected a $20,000 lobbying expenditure limit for the current year. If the organization spends $30,000 on lobbying this year, what is the consequence?
An exempt scientific research organization has elected a $20,000 lobbying expenditure limit for the current year. If the organization spends $30,000 on lobbying this year, what is the consequence?
Which of the following statements about the taxability of UBTI is TRUE?
Which of the following statements about the taxability of UBTI is TRUE?
An exempt organization's activities include providing rehabilitation services to individuals with disabilities. The organization also operates a store that sells items made by these individuals as part of their rehabilitation program. Would this store operation generate unrelated business taxable income (UBTI)?
An exempt organization's activities include providing rehabilitation services to individuals with disabilities. The organization also operates a store that sells items made by these individuals as part of their rehabilitation program. Would this store operation generate unrelated business taxable income (UBTI)?
Flashcards
Form 1023
Form 1023
Application form for tax-exempt status for charitable organizations.
Private Foundation Exemption
Private Foundation Exemption
A parent organization cannot apply for a private foundation; it must apply itself.
Form 990-EZ
Form 990-EZ
Form filed by non-exempt charitable trusts with specific income and asset limits.
Tax-Deductible Contributions
Tax-Deductible Contributions
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Unrelated Business Taxable Income
Unrelated Business Taxable Income
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Unrelated Business Taxable Income (UBTI)
Unrelated Business Taxable Income (UBTI)
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Tax-exempt organization
Tax-exempt organization
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UBTI requirements
UBTI requirements
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Filing Form 990-T
Filing Form 990-T
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UBTI from volunteers
UBTI from volunteers
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Publications by trade associations
Publications by trade associations
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Loss of tax-exempt status
Loss of tax-exempt status
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Nonmember receipts limit
Nonmember receipts limit
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Lobbying expenditure limits
Lobbying expenditure limits
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Excise tax for lobbying excess
Excise tax for lobbying excess
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Study Notes
Pension Trust Application for Exemption
- Employee pension trusts file a letter, not a form, listing required information for exemption.
- Parent organizations cannot file for private foundation status—they must file independently.
Private Foundation Status
- A charitable, religious, or scientific organization is presumed a private foundation if its gross receipts exceed $5,000 and it doesn't notify the IRS of its status via Form 1023 within 27 months of formation.
Non-Exempt Charitable Trust Filings
- A non-exempt charitable trust may file Form 990-EZ if gross receipts are under $200,000 and total assets are under $500,000.
Charitable Deductions
- Contributions to civic leagues (promoting social welfare), organizations for scientific or educational purposes are deductible.
- Donations to cemetery companies are generally deductible; however, those operating exclusively for members aren't tax-exempt.
Tax-Exempt Organization Activities and UBTI
- Selling items made by rehabilitation clients is related to the organization's purpose and thus does not create unrelated business taxable income (UBTI).
- Operating a grocery store by emotionally handicapped individuals is related to the organization's therapeutic purpose and does not generate UBTI.
- UBTI is income from a business not directly related to the organization's exempt purpose, regularly carried on.
Unrelated Business Taxable Income (UBTI)
- Income from services by unpaid volunteers isn't UBTI if substantially all the work is done by them.
- Income from business activities not substantially related to the exempt purpose is not UBTI if not regularly conducted.
- UBTI is taxed at corporate regular income tax rates, excluding income under $1,000.
- Benefit to shareholders, trustees, officers, or employees is irrelevant to UBTI.
Form 990-T and UBTI
- An organization must file Form 990-T (UBTI tax return) if gross income from an unrelated business is $1,000 or more.
- A tax return for UBTI is not required if gross income used in calculating UBTI is under $1,000.
Activities Not Resulting in UBTI
- A trade association selling publications for member seminars is likely a related activity and thus not UBTI.
- Accounting and tax services by a labor union chapter for its members is likely not related to the union's exempt purpose.
Social Club Exempt Status Loss
- Exempt status of a social club is lost if net earnings benefit private shareholders.
- Exempt status is also lost if over 35% of receipts originate from non-member sources.
Lobbying Expenditures and Exemption
- A scientific research organization's exceeding its elected lobbying expenditure limit results in a 25% excise tax on the excess amount.
Civic League Application
- Civic leagues seeking exempt status use Form 1024, not Form 1023 or a letter.
Tax-Exempt Organization Categories
- Tax-exempt organizations include religious, political, labor, civic welfare, child/animal protection, athletic, fraternal beneficiary, social, and schools.
Annual Filing Requirements Exemptions
- Certain types of church or church-affiliated groups and organizations with gross receipts of $50,000 or less are exempt from annual filing requirements.
990-EZ Form Usage
- Organizations with under $200,000 in gross receipts and $500,000 in assets can use Form 990-EZ instead of Form 990.
Unrelated Business Definition
- An unrelated business is one engaged in trades/businesses generating income (or loss) that isn't substantially related to the organization's exempt purpose.
Deductible Donations
- Donations to various exempt organizations (e.g., corporations, 501(c)(3) organizations, cemetery companies, cooperative organizations, childcare) are often tax-deductible.
E-Postcards (Form 990-N)
- Organizations with under $50,000 in gross receipts and not required to file an annual notice use an e-Postcard (Form 990-N).
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