Tax Problems – Questin And Answer ,.,. Ch 23…..

31. LO. 2, 3 Wellness, Inc. , a § 501(c)(3) organization, makes lobbying expenditures of $340,000 during 2013. Exempt purpose expenditures were $600,000 for the first six months of the year and $950,000 for the last six months of the year. Determine theFederal income tax consequences to Wellness if:a. It does not make the § 501(h) lobbying election. b. It does make the § 501(h) lobbying election. 32. LO. 3, 6, 8 Roadrunner, Inc. , is an exempt medical organization. Quail, Inc. , a sporting goods retailer, is a wholly owned subsidiary of Roadrunner. Roadrunner inherited the Quail stock last year from a major benefactor of the medical organization. Quails taxable income is $550,000. Quail will remit all of its earnings, net of any taxes, to Roadrunner to support the exempt purpose of the parent. a. Is Quail subject to Federal income tax? If so, calculate the liability. b. Arthur Morgan, the treasurer of Roadrunner, has contacted you regarding minimizing or eliminating Quails tax liability. He would like to know if the tax consequences would be better if Quail were liquidated into Roadrunner. Write a letter to Morgan that contains your advice. Roadrunners address is 500 Rouse Tower, Rochester, NY 14627. c. Would your answer in (a) change if Roadrunner had acquired the Quail stock by purchase or gift rather than by bequest? Discuss. d. How would the tax consequences change if Quails taxable income was only $100,000 and it remitted only 75% of its earnings, net of taxes, to Roadrunner?33. LO. 3 Initiate, Inc. , a § 501(c)(3) organization, receives the following revenues and incurs the following expenses. Grant from Gates Foundation $ 70,000Charitable contributions received 625,000Expenses in carrying out its exempt mission 500,000Net income before taxes of Landscaping, Inc. , a wholly owned for-profit subsidiary 400,000Landscaping, Inc. , remits all of its after-tax profits each year to Initiate. Calculate the amount of the Federal income tax, if any, for Initiate and for Landscaping. 34. LO. 4 Pigeon, Inc. , a § 501(c)(3) organization, received support from the following sources. Governmental unit A for services rendered $ 6,300Governmental unit B for services rendered 4,500Fees from the general public for services rendered (each payment was $100) 75,000Gross investment income 39,000Contributions from disqualified persons 26,000Contributions from other than disqualified persons (each gift was $50) 160,000Total support $310,800a. Does Pigeon satisfy the test for receiving broad public support? Why or why not?b. Is Pigeon a private foundation? Be specific in your answer. c. Arnold Horn, Pigeons treasurer, has asked you to advise him on whether Pigeon is a private foundation. Write a letter to him in which you address the issue. His address is 250 Bristol Road, Charlottesville, VA 22903. 35. LO. 5 Gray, Inc. , a private foundation, reports the following items of income and deductions. Interest income $ 29,000Rent income 61,000Dividend income 15,000Royalty income 22,000Unrelated business income 80,000Rent expenses (26,000)Unrelated business expenses (12,000)Gray is not an exempt operating foundation, and it is not eligible for the 1% tax rate. a. Calculate the net investment income. b. Calculate the tax on net investment income. c. What is the purpose of the tax on net investment income?36. LO. 5 Salmon, Inc. , a private foundation, has existed for 8 years. During this period,Salmon has been unable to satisfy the requirements for classification as a private operating foundation. At the end of 2012, it had undistributed income of $350,000. Of this amount, $185,000 was distributed in 2013, and $165,000 was distributed during the first quarter of 2014. The IRS deficiency notice was mailed on August 1, 2015. a. Calculate the initial tax for 2012, 2013, and 2014. b. Calculate the additional tax for 2015. 37. LO. 5, 8 Otis is the CEO of Rectify, Inc. , a private foundation. Otis invests $500,000 (80%) of the foundations investment portfolio in derivatives. Previously, the $500,000 had been invested in corporate bonds with an AA rating that earned 7% per annum. If the derivatives investment works as Otiss investment adviser claims, the annual earnings could be as high as 20%. a. Determine whether Rectify is subject to any of the taxes imposed on private foundations. b. If so, calculate the amount of the initial tax. c. If so, calculate the amount of the additional tax if the act causing the imposition of the tax is not addressed within the correction period. d. Are Otis and the foundation better off financially if the prohibited transaction, if any, is addressed within the correction period? Explain. 38. LO. 5 The board of directors of White Pearl, Inc. , a private foundation, consists ofCharlyne, Beth, and Carlos. They vote unanimously to provide a $325,000 grant to Marcus, their business associate. The grant is to be used for travel and education and does not qualify as a permitted grant to individuals (i. e. , it is a taxable expenditure under § 4945). Each director knows that Marcus was selected for the grant because he is a friend of the organization and that the grant is a taxable expenditure. a. Calculate the initial tax imposed on White Pearl. b. Calculate the initial tax imposed on the foundation manager (i. e. , board of directors). 39. LO. 6 The Open Museum is an exempt organization that operates a gift shop. The museums annual operations budget is $3. 2 million. Gift shop sales generate a profit of $900,000. Another $600,000 of investment income is generated by the museums endowment fund. Both the income from the gift shop and the endowment income are used to support the exempt purpose of the museum. The balance of $1. 7 million required for annual operations is provided through admission fees. Wayne Davis, a new board member, does not understand why the museum is subject to tax at all, particularly because all of the entitys profits are used in carrying out the mission of the museum. The museums address is 250 Oak Avenue, Peoria, IL 61625. a. Calculate the amount of unrelated business income. b. Assume instead that the endowment income is reinvested in the endowment fund, rather than being used to support annual operations. Calculate the amount of unrelated business income. c. As the museum treasurer, write a letter to Wayne explaining the reason for the tax consequences. Mr. Daviss address is 45 Pine Avenue, Peoria, IL 61625. 40. LO. 6 Upward and Onward, Inc. , a § 501(c)(3) organization that provides training programs for welfare recipients, reports the following income and expenses from the sale of products associated with the training program. Gross income from sales $425,000Cost of goods sold 106,000Advertising and selling expenses 26,000Administrative expenses 112,500Calculate Upward and Onwards UBIT:a. Assume that the sale of the training program products is substantially related toUpward and Onwards exempt purpose. b. Assume that the sale of the training program products is not substantially related toUpward and Onwards exempt purpose.

Originally posted 2018-06-28 01:03:17. Republished by Blog Post Promoter

Tax Problems – Questin And Answer ,.,. Ch 23

1. LO.1, 6 Eggshell, Inc., a C corporation, operates a rental clothing store, and its profits are subject to double taxation. First Church of the States operates a retail gift shop and bookshop and is not subject to taxation. What is the explanation for this difference in Federal income tax treatment?2. LO.1 Why are certain organizations either partially or completely exempt from Federal income tax?3. LO.1 Which of the following organizations qualify for exempt status?a. Tulane University (a private university).b. Virginia Qualified Tuition Program.c. Red Cross.d. Disneyland.e. Ford Foundation.f. Houston Chamber of Commerce.g. Colonial Williamsburg Foundation.h. Professional Golfers Association (PGA) Tour.i. Pittsburgh Steelers.j. Cleveland Indians.k. Louisiana State University (a public university).4. LO.1 Identify the statutory authority under which each of the following is exempt fromFederal income tax.a. Kingsmill Country Club.b. Shady Lawn Cemetery.c. Peach Credit Union.d. Veterans of Foreign Wars.e. Boy Scouts of America.f. United Fund.g. Federal Deposit Insurance Corporation.h. Bruton Parish Episcopal Church.i. PTA.j. National Press Club.k. Brown University (a private university).5. LO.2 What are the common characteristics shared by many exempt organizations?6. LO.3 Leonard contributes $4,000 to an exempt organization. Addie contributes $4,000 to a different exempt organization. Why might Addie be permitted a $4,000 charitable contribution deduction in calculating her itemized deductions whenLeonard is not?7. LO.3 Good, Inc., a § 501(c)(3) exempt organization, engages in a § 503 prohibited transaction. What negative tax consequences may be associated with Good engaging in a § 503 prohibited transaction?8. LO.3 Can a church make an election that will enable it to engage in lobbying on a limited basis without incurring any negative tax consequences? Explain.9. LO.3 Under what circumstances can an exempt organization engage in lobbying activities?What types of exempt organizations are eligible for this treatment?10. LO.3 The IRS can impose intermediate sanctions on a public charity if its gross unrelated business income exceeds 50% of its gross income or if less than two-thirds of its net unrelated business income is used in carrying out its tax-exempt mission. Evaluate this statement.11. LO.3 The Living Museum is a tax-exempt organization. Dolphin Corporation, a wholly owned subsidiary of the Living Museum, sells boats. Dolphin remits all of its earnings each year to its parent. Is Dolphin exempt from Federal income tax because it is a subsidiary of a tax-exempt organization and remits all of its earnings to a tax-exempt organization?Explain.12. LO.3 What types of activities are not subject to the tax imposed on feeder organizations?13. LO.4, 5 What is a private foundation? What are the disadvantages of an exempt organization being classified as a private foundation?14. LO.4 Which of the following exempt organizations could be private foundations?a. Bruton Parish Episcopal Church.b. Our Lady Catholic Church.c. Port Allen Community Hospital.d. National Football League (NFL).e. Southeastern Louisiana University Alumni Association.f. United Fund.g. Lees Foundation.h. Rice University (a private university).15. LO.4 Describe the external support test and the internal support test for a private foundation.

Tax Problems – Questin And Answer ,.,. Ch 23…..

31. LO.2, 3 Wellness, Inc., a § 501(c)(3) organization, makes lobbying expenditures of $340,000 during 2013. Exempt purpose expenditures were $600,000 for the first six months of the year and $950,000 for the last six months of the year. Determine theFederal income tax consequences to Wellness if:a. It does not make the § 501(h) lobbying election.b. It does make the § 501(h) lobbying election.32. LO.3, 6, 8 Roadrunner, Inc., is an exempt medical organization. Quail, Inc., a sporting goods retailer, is a wholly owned subsidiary of Roadrunner. Roadrunner inherited the Quail stock last year from a major benefactor of the medical organization. Quails taxable income is $550,000. Quail will remit all of its earnings, net of any taxes, to Roadrunner to support the exempt purpose of the parent.a. Is Quail subject to Federal income tax? If so, calculate the liability.b. Arthur Morgan, the treasurer of Roadrunner, has contacted you regarding minimizing or eliminating Quails tax liability. He would like to know if the tax consequences would be better if Quail were liquidated into Roadrunner. Write a letter to Morgan that contains your advice. Roadrunners address is 500 Rouse Tower, Rochester, NY 14627.c. Would your answer in (a) change if Roadrunner had acquired the Quail stock by purchase or gift rather than by bequest? Discuss.d. How would the tax consequences change if Quails taxable income was only $100,000 and it remitted only 75% of its earnings, net of taxes, to Roadrunner?33. LO.3 Initiate, Inc., a § 501(c)(3) organization, receives the following revenues and incurs the following expenses.Grant from Gates Foundation $ 70,000Charitable contributions received 625,000Expenses in carrying out its exempt mission 500,000Net income before taxes of Landscaping, Inc., a wholly owned for-profit subsidiary 400,000Landscaping, Inc., remits all of its after-tax profits each year to Initiate. Calculate the amount of the Federal income tax, if any, for Initiate and for Landscaping.34. LO.4 Pigeon, Inc., a § 501(c)(3) organization, received support from the following sources.Governmental unit A for services rendered $ 6,300Governmental unit B for services rendered 4,500Fees from the general public for services rendered (each payment was $100) 75,000Gross investment income 39,000Contributions from disqualified persons 26,000Contributions from other than disqualified persons (each gift was $50) 160,000Total support $310,800a. Does Pigeon satisfy the test for receiving broad public support? Why or why not?b. Is Pigeon a private foundation? Be specific in your answer.c. Arnold Horn, Pigeons treasurer, has asked you to advise him on whether Pigeon is a private foundation. Write a letter to him in which you address the issue. His address is 250 Bristol Road, Charlottesville, VA 22903.35. LO.5 Gray, Inc., a private foundation, reports the following items of income and deductions.Interest income $ 29,000Rent income 61,000Dividend income 15,000Royalty income 22,000Unrelated business income 80,000Rent expenses (26,000)Unrelated business expenses (12,000)Gray is not an exempt operating foundation, and it is not eligible for the 1% tax rate.a. Calculate the net investment income.b. Calculate the tax on net investment income.c. What is the purpose of the tax on net investment income?36. LO.5 Salmon, Inc., a private foundation, has existed for 8 years. During this period,Salmon has been unable to satisfy the requirements for classification as a private operating foundation. At the end of 2012, it had undistributed income of $350,000. Of this amount, $185,000 was distributed in 2013, and $165,000 was distributed during the first quarter of 2014. The IRS deficiency notice was mailed on August 1, 2015.a. Calculate the initial tax for 2012, 2013, and 2014.b. Calculate the additional tax for 2015.37. LO.5, 8 Otis is the CEO of Rectify, Inc., a private foundation. Otis invests $500,000 (80%) of the foundations investment portfolio in derivatives. Previously, the $500,000 had been invested in corporate bonds with an AA rating that earned 7% per annum. If the derivatives investment works as Otiss investment adviser claims, the annual earnings could be as high as 20%.a. Determine whether Rectify is subject to any of the taxes imposed on private foundations.b. If so, calculate the amount of the initial tax.c. If so, calculate the amount of the additional tax if the act causing the imposition of the tax is not addressed within the correction period.d. Are Otis and the foundation better off financially if the prohibited transaction, if any, is addressed within the correction period? Explain.38. LO.5 The board of directors of White Pearl, Inc., a private foundation, consists ofCharlyne, Beth, and Carlos. They vote unanimously to provide a $325,000 grant to Marcus, their business associate. The grant is to be used for travel and education and does not qualify as a permitted grant to individuals (i.e., it is a taxable expenditure under § 4945). Each director knows that Marcus was selected for the grant because he is a friend of the organization and that the grant is a taxable expenditure.a. Calculate the initial tax imposed on White Pearl.b. Calculate the initial tax imposed on the foundation manager (i.e., board of directors).39. LO.6 The Open Museum is an exempt organization that operates a gift shop. The museums annual operations budget is $3.2 million. Gift shop sales generate a profit of $900,000. Another $600,000 of investment income is generated by the museums endowment fund.Both the income from the gift shop and the endowment income are used to support the exempt purpose of the museum. The balance of $1.7 million required for annual operations is provided through admission fees.Wayne Davis, a new board member, does not understand why the museum is subject to tax at all, particularly because all of the entitys profits are used in carrying out the mission of the museum. The museums address is 250 Oak Avenue, Peoria, IL 61625.a. Calculate the amount of unrelated business income.b. Assume instead that the endowment income is reinvested in the endowment fund, rather than being used to support annual operations. Calculate the amount of unrelated business income.c. As the museum treasurer, write a letter to Wayne explaining the reason for the tax consequences. Mr. Daviss address is 45 Pine Avenue, Peoria, IL 61625.40. LO.6 Upward and Onward, Inc., a § 501(c)(3) organization that provides training programs for welfare recipients, reports the following income and expenses from the sale of products associated with the training program.Gross income from sales $425,000Cost of goods sold 106,000Advertising and selling expenses 26,000Administrative expenses 112,500Calculate Upward and Onwards UBIT:a. Assume that the sale of the training program products is substantially related toUpward and Onwards exempt purpose.b. Assume that the sale of the training program products is not substantially related toUpward and Onwards exempt purpose.

Tax Problems – Questin And Answer ,.,. Ch 23

16. LO.5 Although private foundations generally are exempt from Federal income tax, they may be subject to two types of taxes. Identify these taxes, and discuss why they are imposed on private foundations.17. LO.5 Sunset, Inc., a § 501(c)(3) exempt organization that is classified as a private foundation, generates investment income of $500,000 for the current tax year. This amount represents 18% of Sunsets total income.a. What type of tax is imposed on Sunset associated with its investment income?b. Is the receipt of this investment income likely to result in Sunset losing its exempt status?Why or why not?c. Would your answers in (a) and (b) change if the $500,000 represented greater than50% of Sunsets total income? Explain.18. LO.4, 5 Really Welcome, Inc., a tax-exempt organization, receives 30% of its support from disqualified persons. Another disqualified person has agreed to match this support if Really Welcome will appoint him to the organizations board of directors. What tax issues are relevant to Really Welcome as it makes this decision?19. LO.6 Winston recently became the treasurer of Homeless, Inc., a § 501(c)(3) organization that feeds the homeless. One of the entitys directors has proposed that Homeless purchase and operate a fast-food franchise as part of Homeless, Inc., to raise additional revenue (a projected increase of 45%) to carry out its tax-exempt mission. Because the earnings generated by the fast-food franchise would be tax-exempt, substantial additional revenue would be provided. How should Winston respond? 20. LO.6 What is the purpose of the unrelated business income tax (UBIT)?21. LO.6 What type of activity by a church is likely to be subject to the unrelated business income tax? What factors must be present for this activity to be classified as an unrelated trade or business?22. LO.6 An exempt municipal hospital operates a pharmacy that is staffed by a pharmacist24 hours per day. The pharmacy serves only hospital patients. Is the pharmacy an unrelated trade or business? Explain.23. LO.6, 8 An exempt hospital receives as a gift from a wealthy donor all of the shares of stock of Compute, Inc., a retail computer chain. Because the chain is very profitable and its CEO has offered to continue to manage it, the hospital has decided to operate the chain rather than sell the stock. All of the chains profits will be used in carrying out the exempt mission of the hospital.Advise the hospital on whether better Federal income tax consequences can be achieved by operating the chain as a subsidiary or as a division of the hospital corporation.24. LO.1, 6 To which of the following tax-exempt organizations may the UBIT apply?a. Red Cross.b. Salvation Army.c. United Fund.d. College of William and Mary.e. Rainbow, Inc., a private foundation.f. Louisiana State University.g. Colonial Williamsburg Foundation.h. Federal Land Bank.i. University of Virginia Hospital.25. LO.6 Discuss the significance of the “regularly carried on” test as it relates to the UBIT.26. LO.6 An exempt organization is considering conducting bingo games on Thursday nights as a way of generating additional revenue to support its exempt purpose. Before doing so, however, the president of the organization has come to you for advice regarding the effect on the organizations exempt status and whether the net income from the bingo games will be taxable. Identify the relevant tax issues.27. LO.6 Define each of the following with respect to unrelated debt-financed property.a. Debt-financed income.b. Debt-financed property.c. Acquisition indebtedness.d. Average acquisition indebtedness.e. Average adjusted basis.28. LO.1, 7 Tom is the treasurer of the City Garden Club, a new garden club. A friend who is the treasurer of the garden club in a neighboring community tells Tom that it is not necessary for the garden club to file a request for exempt status with the IRS. HasTom received correct advice? Explain.29. LO.1, 7 Abby Sue recently became the treasurer of First Point Church. The church has been in existence for three years and has never filed anything with the IRS.a. Identify any reporting responsibilities that Abby Sue might have as church treasurer.b. Would your answer in (a) change if First Point Church had been in existence for more than 10 years? Explain.c. Would your answer in (a) change if First Point Church had reported some unrelated business income? Explain.30. LO.7 Shane and Brittany are treasurers for § 501(c)(3) exempt organizations. Neither exempt organization is a church. Each year, Shanes exempt organization files a Form990 while Brittanys exempt organization files a Form 990–PF. Discuss the public disclosure requirements for each exempt organization.

Tax Problems – Questin And Answer ,.,. Ch 23

1. LO. 1, 6 Eggshell, Inc. , a C corporation, operates a rental clothing store, and its profits are subject to double taxation. First Church of the States operates a retail gift shop and bookshop and is not subject to taxation. What is the explanation for this difference in Federal income tax treatment?2. LO. 1 Why are certain organizations either partially or completely exempt from Federal income tax?3. LO. 1 Which of the following organizations qualify for exempt status?a. Tulane University (a private university). b. Virginia Qualified Tuition Program. c. Red Cross. d. Disneyland. e. Ford Foundation. f. Houston Chamber of Commerce. g. Colonial Williamsburg Foundation. h. Professional Golfers Association (PGA) Tour. i. Pittsburgh Steelers. j. Cleveland Indians. k. Louisiana State University (a public university). 4. LO. 1 Identify the statutory authority under which each of the following is exempt fromFederal income tax. a. Kingsmill Country Club. b. Shady Lawn Cemetery. c. Peach Credit Union. d. Veterans of Foreign Wars. e. Boy Scouts of America. f. United Fund. g. Federal Deposit Insurance Corporation. h. Bruton Parish Episcopal Church. i. PTA. j. National Press Club. k. Brown University (a private university). 5. LO. 2 What are the common characteristics shared by many exempt organizations?6. LO. 3 Leonard contributes $4,000 to an exempt organization. Addie contributes $4,000 to a different exempt organization. Why might Addie be permitted a $4,000 charitable contribution deduction in calculating her itemized deductions whenLeonard is not?7. LO. 3 Good, Inc. , a § 501(c)(3) exempt organization, engages in a § 503 prohibited transaction. What negative tax consequences may be associated with Good engaging in a § 503 prohibited transaction?8. LO. 3 Can a church make an election that will enable it to engage in lobbying on a limited basis without incurring any negative tax consequences? Explain. 9. LO. 3 Under what circumstances can an exempt organization engage in lobbying activities?What types of exempt organizations are eligible for this treatment?10. LO. 3 The IRS can impose intermediate sanctions on a public charity if its gross unrelated business income exceeds 50% of its gross income or if less than two-thirds of its net unrelated business income is used in carrying out its tax-exempt mission. Evaluate this statement. 11. LO. 3 The Living Museum is a tax-exempt organization. Dolphin Corporation, a wholly owned subsidiary of the Living Museum, sells boats. Dolphin remits all of its earnings each year to its parent. Is Dolphin exempt from Federal income tax because it is a subsidiary of a tax-exempt organization and remits all of its earnings to a tax-exempt organization?Explain. 12. LO. 3 What types of activities are not subject to the tax imposed on feeder organizations?13. LO. 4, 5 What is a private foundation? What are the disadvantages of an exempt organization being classified as a private foundation?14. LO. 4 Which of the following exempt organizations could be private foundations?a. Bruton Parish Episcopal Church. b. Our Lady Catholic Church. c. Port Allen Community Hospital. d. National Football League (NFL). e. Southeastern Louisiana University Alumni Association. f. United Fund. g. Lees Foundation. h. Rice University (a private university). 15. LO. 4 Describe the external support test and the internal support test for a private foundation.

Tax Problems – Questin And Answer ,.,. Ch 23

16. LO. 5 Although private foundations generally are exempt from Federal income tax, they may be subject to two types of taxes. Identify these taxes, and discuss why they are imposed on private foundations. 17. LO. 5 Sunset, Inc. , a § 501(c)(3) exempt organization that is classified as a private foundation, generates investment income of $500,000 for the current tax year. This amount represents 18% of Sunsets total income. a. What type of tax is imposed on Sunset associated with its investment income?b. Is the receipt of this investment income likely to result in Sunset losing its exempt status?Why or why not?c. Would your answers in (a) and (b) change if the $500,000 represented greater than50% of Sunsets total income? Explain. 18. LO. 4, 5 Really Welcome, Inc. , a tax-exempt organization, receives 30% of its support from disqualified persons. Another disqualified person has agreed to match this support if Really Welcome will appoint him to the organizations board of directors. What tax issues are relevant to Really Welcome as it makes this decision?19. LO. 6 Winston recently became the treasurer of Homeless, Inc. , a § 501(c)(3) organization that feeds the homeless. One of the entitys directors has proposed that Homeless purchase and operate a fast-food franchise as part of Homeless, Inc. , to raise additional revenue (a projected increase of 45%) to carry out its tax-exempt mission. Because the earnings generated by the fast-food franchise would be tax-exempt, substantial additional revenue would be provided. How should Winston respond? 20. LO. 6 What is the purpose of the unrelated business income tax (UBIT)?21. LO. 6 What type of activity by a church is likely to be subject to the unrelated business income tax? What factors must be present for this activity to be classified as an unrelated trade or business?22. LO. 6 An exempt municipal hospital operates a pharmacy that is staffed by a pharmacist24 hours per day. The pharmacy serves only hospital patients. Is the pharmacy an unrelated trade or business? Explain. 23. LO. 6, 8 An exempt hospital receives as a gift from a wealthy donor all of the shares of stock of Compute, Inc. , a retail computer chain. Because the chain is very profitable and its CEO has offered to continue to manage it, the hospital has decided to operate the chain rather than sell the stock. All of the chains profits will be used in carrying out the exempt mission of the hospital. Advise the hospital on whether better Federal income tax consequences can be achieved by operating the chain as a subsidiary or as a division of the hospital corporation. 24. LO. 1, 6 To which of the following tax-exempt organizations may the UBIT apply?a. Red Cross. b. Salvation Army. c. United Fund. d. College of William and Mary. e. Rainbow, Inc. , a private foundation. f. Louisiana State University. g. Colonial Williamsburg Foundation. h. Federal Land Bank. i. University of Virginia Hospital. 25. LO. 6 Discuss the significance of the ?regularly carried on? test as it relates to the UBIT. 26. LO. 6 An exempt organization is considering conducting bingo games on Thursday nights as a way of generating additional revenue to support its exempt purpose. Before doing so, however, the president of the organization has come to you for advice regarding the effect on the organizations exempt status and whether the net income from the bingo games will be taxable. Identify the relevant tax issues. 27. LO. 6 Define each of the following with respect to unrelated debt-financed property. a. Debt-financed income. b. Debt-financed property. c. Acquisition indebtedness. d. Average acquisition indebtedness. e. Average adjusted basis. 28. LO. 1, 7 Tom is the treasurer of the City Garden Club, a new garden club. A friend who is the treasurer of the garden club in a neighboring community tells Tom that it is not necessary for the garden club to file a request for exempt status with the IRS. HasTom received correct advice? Explain. 29. LO. 1, 7 Abby Sue recently became the treasurer of First Point Church. The church has been in existence for three years and has never filed anything with the IRS. a. Identify any reporting responsibilities that Abby Sue might have as church treasurer. b. Would your answer in (a) change if First Point Church had been in existence for more than 10 years? Explain. c. Would your answer in (a) change if First Point Church had reported some unrelated business income? Explain. 30. LO. 7 Shane and Brittany are treasurers for § 501(c)(3) exempt organizations. Neither exempt organization is a church. Each year, Shanes exempt organization files a Form990 while Brittanys exempt organization files a Form 990?PF. Discuss the public disclosure requirements for each exempt organization.