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2 Which of these organizations is subject to a penalty tax for failure to distribute its income?
a. Public charity b. Private Foundation
c. Feeder organization d. none of these
4 Which one of these types of organizations qualifies as an organization exempt from income tax?
a. All "feeder" organizations, primarily conducting businesses for profit, but
distributing 100% of their profits to organizations exempt from taxation.
b. A private foundation organized to influence legislation pertaining to protection of the environment.
c. A business league operated primarily to publish a yearbook comprised of members' paid
advertisements, solicited by paid employees.
d. A labor union that represents employees of a particular industry in their negotiations with employers.
INTERMEDIATE SANCTIONS
PRIVATE FOUNDATIONS
6 (Sec. 508(b)) A private foundation is a special type of:
a. charity b. civic league c. business league d. social club
7 Which of the following § 501(c)(3) exempt organizations is appropriately classified as a private foundation?
a. Cincinnati Memorial Hospital. b. University of Arizona.
c. Bill and Melinda Gates Foundation d. United Fund.
e All of the above.
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8 Which of the following statements is correct regarding the unrelated business income of exempt
organizations?
a. Unrelated business income relates to the performance of services, but not to the sale of goods.
b. An unrelated business does not include an activity where all the work is performed for the organization
by unpaid volunteers.
c. Unrelated business income tax will not be imposed if profits from the unrelated business are used to
support the exempt organization's charitable activities.
d. If an exempt organization has any unrelated business income, it will result in the loss of the
organization's exempt status.
9 For an exempt organization to be subject to the UBIT, which of the following circumstances must exist?
a. The exempt organization conducts a trade or business.
b. The trade or business is not substantially related to the exempt purpose of the organization.
c. The trade or business is regularly carried on by the exempt organization.
d. All of these must be present for the tax to apply.
FILING REQUIREMENTS
10 Which organization is required to file an annual information return using form 990? CPA-Nov-88
a. A church b. An exempt country club
c. A private foundation d. All exempt organizations with gross receipts of $25,000 or more
14 In determining state taxable income, all of the following are adjustments to Federal income except:
a. Net operating loss. b. Federal income tax expense.
c. Dividend income. d. Cost of goods sold. e. State income tax refunds
15 Which of the following are common adjustments to federal taxable to get state taxable income?
a. Adding back the deduction for state income taxes b. adding back interest earned on municipal bonds
c. Subtracting interest income earned on federal bonds
d. Adding or subtracting differences in different deprecation methods required at federal and state levels.
e. All of these
16 Dough Company sold an asset on the first day of the tax year for $100,000. Dough’s tax basis for the asset was $40,000. Because of
differences in cost recovery schedules, the state regular-tax basis in the asset was $60,000. What adjustment, if any, should be made to Federal
taxable income in determining the correct state taxable income for the typical state?
a. $0. b. $20,000. c. $45,000. d. ($20,000).
17 Big Corporation operates in two states. Its total taxable income amounts to $1,000,000.
State1 State 2 Total
Sales $20,000,000 $30,000,000 $50,000,000
Property values $25,000,000 $25,000,000 $50,000,000
Compensation $3,000,000 $2,000,000 $5,000,000
How much taxable income is reported for state no. 2?
a. $1,000,000 b. $250,000 c. $500,000 d. $750,000
18 Repeat preceding question. Assume State no. 2 double weights Sales. How much taxable income is reported for state
no. 2?
a. $525,000 b. $575,000 c. $500,000 d. $750,000
19 Corporation operates in seven states. Its income amounts to $1,700,000. What is the UDITPA factor in State1 (closest)?
State1 Total
Sales $6,000,000 $10,000,000
Property values $22,000,000 $75,000,000
Compensation $1,500,000 $4,500,000
a. 34% b. 36% c. 31% d. 40%
20 A state UDITPA factor is 37%, taxable income to be apportioned is $440,000, and state income tax rate is 10%, what is
the state income tax?
a. $162,800 b. $44,000 c. $146,520 d. $16,280 e. Other
21 Premium Corp. has total taxable income of $1 million, and in State W has a sales factor of 60%, a payroll factor of 50%, and a property
factor of 46%. What is Premium's State W UDITPA apportionment factor and State W taxable income?
a. 50 percent; $500,000 taxable income b. 52 percent; $520,000 taxable income