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Exam 15: Exempt Entities

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Question 81

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The Dispensary is a pharmacy that is part of a § 501(c)(3) hospital. Its primary mission is to dispense medicines for hospital patients. In addition, the pharmacy dispenses medicines to former hospital patients for a period of up to 30 days after discharge from the hospital. It does this for the dual purpose of convenience to the former patients (i.e., the closest pharmacy is 6 miles away), and to ensure that the former patients receive the medicines that have been prescribed for them. The Dispensary carefully carries out the policy of the hospital board that no more than 20% of its gross revenues come from former-patient medicine sales. If necessary, in December of each year, sales to former patients are curtailed to assure compliance with this policy. Sales revenue from each of the two sources is as follows for 2011. Calculate the amount of The Dispensary's unrelated business gross income.

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For any of the activities of The Dispens...

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Question 82

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Why are some organizations exempt from Federal income tax?

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The Code's treatment of exempt organizat...

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Question 83

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If personal property is leased with real property and more than 80% of the rent income under the lease is from personal property, all of the rent income is subject to the unrelated business income tax.

Is the taxation of a feeder organization influenced by the percentage of its earnings that it remits to an exempt organization?

An exempt organization can avoid classification as a private foundation if it is broadly publicly supported. To be broadly publicly supported, which of the following is required?

A corporate payment to an exempt organization that qualifies as a qualified sponsorship payment is not subject to the unrelated business income tax (UBIT).

The excise tax imposed on a private foundation's investment income can be imposed both as an initial (first-level) tax and an additional (second-level) tax.

If an organization qualifies for exempt status for Federal income tax purposes, it is exempt from all Federal income taxes.

Which of the following excise taxes are imposed on the private foundation because it engages in prohibited transactions?

Orange, Inc., a private foundation, engages in a transaction with a disqualified person in the amount of $800,000. Calculate the tax on self-dealing. Assume that corrective action is taken so that the additional tax does not apply.

Discuss any negative tax consequences that result from an exempt organization being classified as a private foundation.