Exercises Of South-Western Federal Taxation 2019 Comprehensive

Research Problem 1. Wonderful Wilderness, Inc., is a tax-exempt business. Lloyd Morgan, the chief financial officer, presents you with the next information. Wonderful Wilderness raises funds to aid its mission in many ways, including efforts and account fees. Wilderness evolves and maintains mailing lists of its members, donors, catalog purchasers, and other followers. Wonderful Wilderness retains exclusive ownership rights to its e-mail lists.

Wilderness occasionally exchanges regular membership lists with other organizations. In addition, Wonderful Wilderness enables other tax-exempt organizations and commercial entities to pay a charge, as set forth in a fee schedule, to use its e-mail lists on the one-time basis per transaction. Morgan appreciates that the Federal income tax legislation applies a UBIT.

He is also aware of the § 512(b)(2) provision that excludes royalties from the UBIT. An IRS agent has elevated the issue that the income from the utilization of the e-mail lists by other entities may be taxable as unrelated business income. Morgan desires you to research this problem for him. Write a letter to Morgan that contains your findings, and make a memo for the tax research files.

Research Problem 2. Your client, Rich N. Ready, has come to you for advice. Rich is interested in many interpersonal welfare issues (e.g., usage of advanced schooling, welfare reform, and abortion rights). He wishes to use his wealth to educate the general public on these issues, as well as to influence related legislation.

Further, he desires to assist the financing of campaigns for political candidates who reveal his views. Thus, Full could anonymously participate in these activities.” This might appear to preclude the lobbying and political campaigning support that Rich desires. Summarize your findings in an e-mail to your trainer; be specific in your answer(s). Research Problem 3. Roger is the pastor at the 3rd Ecumenical Church in Atlanta. Over lunch time with Priscilla, the pastor at another cathedral with whom Roger went to seminary, Roger discovers that another friend’s church lately acquired its tax-exempt status revoked for engaging in politics activities.

From time to time, certain political statistics “give testimony” at Roger’s chapel. Having to worry about his own church’s taxexempt position, he asks you to provide him with the types of activities his cathedral should not engage in or permit. Find a Revenue Ruling that you can use to provide Roger with the required information. Summarize the ruling with two PowerPoint slides. Research Problem 4. Verify the exempt position of the symphony orchestra that performs closest to your home.

Who are its three highest-paid affiliates? Send an e-mail to your trainer explaining how you found these details. • Locate the foundation’s website. • Utilize the Form 990 to look for the amount of payment paid to directors and officials. 340,000 of gross unrelated business income (UBI) in its first year of operations. The next expenditures were incurred in producing the UBI.

Happy House qualifies for the typical annual deduction and has documented plans for reinvesting 100% of online proceeds from UBI back to its exempt activities. House’s unrelated business income tax (UBIT) responsibility for the year? 2. The International Association of Accountants (IAA), a labor union, made a one-time donation to a political candidate who is a member of the organization also.

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In addition, the IAA publicly endorsed the member-candidate through flyers mailed to its regular membership. Which of the following is true about the IAA exempt status? The IAA is entitled to exempt status because the candidate it supported is a member of the union. The IAA is entitled to exempt status since it only made a one-time donation, which is not considered actual influence.

The IAA will be rejected exempt status because it supported a particular political candidate. Utilize the tax sources of the Internet to address the next questions. Usually do not limit your search to the net, but include a review of newsgroups and general research materials, practitioner resources and sites, primary sources of the tax law, boards and discussion organizations, and other opportunities.