Question 1. Blue, Inc., receives its support from the following sources.

1. Blue, Inc., receives its support from the following sources.

a. Blue, Inc., is a private foundation because it satisfies the external support test and fails the internal support test.

b. Blue, Inc., is nota private foundation because it fails both the internal and external support tests.

c. Blue, Inc., is a private foundation because it satisfies both the external support test and the internal support test.

d. Blue, Inc., is nota private foundation because it satisfies both the external support test and the internal support test.

e. None of the statements is true.

2. Which of the following statements is correct?

a. A private foundation is, in general, exempt from Federal income tax.

b. A private foundation may be subject to certain types of Federal income tax.

c. If a broad public support test is satisfied, an exempt organization that otherwise would be classified as a private foundation is notclassified as a private foundation.

d. Only b. and c. are correct.

e. a., b., and c. are correct.

3. Which of the following excise taxes are imposed on private foundations?

a. Tax on failure to distribute income.

b. Tax on excess business holdings.

c. Tax on excess charitable contributions.

d. Only a. and b.

e. a., b., and c.

4. Which of the following taxes that are imposed on private foundations is, effectively, an audit fee to defray IRS expenses?

a. Tax on self-dealing.

b. Tax on failure to distribute income.

c. Tax on excess business holdings.

d. Only a. and c.

e. None of the above.

5. A private foundation is subject to which of the following taxes?

a. Tax on self-dealing.

b. Tax on investments in publicly traded stock.

c. Tax on taxable expenditures that jeopardize charitable purposes.

d. Only a. and c.

e. a., b., and c.

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

a. Tax on investment income.

b. Tax on self-dealing.

c. Tax on failure to distribute income.

d. Only b. and c.

e. a., b., and c.

7. Teal, Inc., is a private foundation which failed to distribute an adequate amount of income for the exempt purpose of Teal. Which of the following statements is correct?

a. An excise tax in the form of an initial tax at the rate of 5% may be imposed on Teal.

b. An excise tax in the form of an initial tax at the rate of

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