Question 1. Which of the following are qualified corporate sponsorship payments?

1. Which of the following are qualified corporate sponsorship payments?

a. The amount of the payment by the corporation to the exempt organization is contingent on the attendance at one or more events.

b. The payment by the corporation to the exempt organization results in only a half-page advertisement in the event program.

c. The payment by the corporation to the exempt organization results in the corporate logo appearing in the

exempt organization’s monthly newsletter.

d. Only b. and c.

e. a., b., and c.

2. Which of the following requirements must be satisfied for a bingo game to be classified as notbeing an unrelated trade or business?

a. The bingo game is legal under both state and local law.

b. The bingo game is conducted by volunteers.

c. For-profit bingo games ordinarily are not permitted in the jurisdiction.

d. Only a. and b. must be satisfied.

e. Only a. and c. must be satisfied.

3. Which of the following statements regarding low-cost articles is correct?

a. The distribution of low-cost articles can be classified as not being an unrelated trade or business.

b. For 2014, a low-cost article is one that costs $10.40 or less.

c. Any contributions received as the result of the distribution of low-cost articles must be included in unrelated business income.

d. Only a. and b. are correct.

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

4. Tan, Inc., a tax-exempt organization, has $65,000 of net unrelated business income. Total charitable contributions (all associated with the unrelated trade or business) are $7,500. Assuming that the $7,500 was deducted in calculating net unrelated business income, what is Tan’s unrelated business taxable income?

a. $57,500.

b. $65,250.

c. $66,000.

d. $72,500.

e. Some other amount.

5. Maroon, Inc., a tax-exempt organization, leases a building and equipment to Brown Partnership. The rental income from the building is $100,000 and from the equipment is $9,000. Rental expenses are $40,000 for the building and $4,000 for the equipment. What adjustment must be made to net unrelated business income?

a. $0.

b. ($60,000).

c. ($65,000).

d. ($109,000).

e. Some other amount.

6. For purposes of the unrelated business income tax (UBIT), land that is acquired by the exempt organization for later exempt-use is excluded from the definition of debt-financed property if certain requirements are satisfied. Which of the following is not included in the requirements?

a. The principal purpose of acquiring the land is for use (substantially all) in achieving the organization’s exempt

purpose.

b. The fair market value of the land is not over 50% of the fair market value of land presently owned by the exempt organization.

c. The use of the land by the exempt organization will begin within ten years of the acquisition date.

d. At the date the land is acquired, it is located in the neighborhood of other property of the organization for

which substantially all the use is for achieving the organization’s exempt purpose.

e. All of the above are requirements.

7. Which of the following is one of the requirements that will enable mortgaged land acquired by an exempt organization for later exempt use to be excluded from debt-financed property, for purposes of the unrelated business income tax?

a. The principal purpose of acquiring the land is for investment.

b. The land is used within ten years of the acquisition date in the organization’s exempt purpose.

c. The land is located in the United States.

d. Only a. and b.

e. None of the above.

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