NFP Test Questions and Answers 100%
Correct
Explain a major difference between a 501c3 tax excempt org. and a 501c7 tax exempt org differ.
A 501(c)(3) organization is organized and operated for religious, charitable, scientific,
literary, educational purposes... charitable deductions while a 501(c)(7) organization is organized
and operated for the social or recreational purposes of a group of people does not offer charitable
deduction.
What are the distinguishing characteristics between a public charity and a private foundation?
What is a public support test and how does it relate to pub charities and priv found.? A
public charity receives financial support from the general public. Private Foundations receive
most of their financial support from a few people, such as a family or a group of friends, etc.
Public charities are more open to the public while private foundations are not. A public support
test is conducted by the government to see if an organization is receiving substantial support
from the public or not. Depending on this support will decide whether the organization is public
or private.
How can a nfp museum ensure that its gift shop activities will not result in an unrelated business
income tax liability? A gift shop is considered unrelated to the tax exempt mission of the
, museum and regularly carries on business. It will be subjected to the unrelated business income
tax if its net income is greater than $1000.
What is an IRC Sec 527 org? Are these org tax exempt? What filing requirements have been
imposed on 527 org by campaign finance laws? This section consists of various
organizations like political parties, political campaigns, and organizations as political action
committee. These organizations are exempt from tax. The filing requirements include
-NFP should periodically file Form 8872.
-inform the IRS on the name and address on individuals who contributes more than $200 towards
the NFP
-and the info on the name and address of individuals who receive more than $500 on annual
basis from the NFP
What are excessive benefits and what are the consequences of paying/receiving excessive
benefits? Excessive benefits is an amount received by the NFP organizations officers. The
amount is generated from unreasonable transactions (bargain price, excessive compensation)
Consequences of paying or receiving excessive benefits include an additional 25% tax on excess
benefits and intermediate sanctions.
Correct
Explain a major difference between a 501c3 tax excempt org. and a 501c7 tax exempt org differ.
A 501(c)(3) organization is organized and operated for religious, charitable, scientific,
literary, educational purposes... charitable deductions while a 501(c)(7) organization is organized
and operated for the social or recreational purposes of a group of people does not offer charitable
deduction.
What are the distinguishing characteristics between a public charity and a private foundation?
What is a public support test and how does it relate to pub charities and priv found.? A
public charity receives financial support from the general public. Private Foundations receive
most of their financial support from a few people, such as a family or a group of friends, etc.
Public charities are more open to the public while private foundations are not. A public support
test is conducted by the government to see if an organization is receiving substantial support
from the public or not. Depending on this support will decide whether the organization is public
or private.
How can a nfp museum ensure that its gift shop activities will not result in an unrelated business
income tax liability? A gift shop is considered unrelated to the tax exempt mission of the
, museum and regularly carries on business. It will be subjected to the unrelated business income
tax if its net income is greater than $1000.
What is an IRC Sec 527 org? Are these org tax exempt? What filing requirements have been
imposed on 527 org by campaign finance laws? This section consists of various
organizations like political parties, political campaigns, and organizations as political action
committee. These organizations are exempt from tax. The filing requirements include
-NFP should periodically file Form 8872.
-inform the IRS on the name and address on individuals who contributes more than $200 towards
the NFP
-and the info on the name and address of individuals who receive more than $500 on annual
basis from the NFP
What are excessive benefits and what are the consequences of paying/receiving excessive
benefits? Excessive benefits is an amount received by the NFP organizations officers. The
amount is generated from unreasonable transactions (bargain price, excessive compensation)
Consequences of paying or receiving excessive benefits include an additional 25% tax on excess
benefits and intermediate sanctions.
