Question

The exempt organization § 501(c)(3) that is classified as a private foundation, generates investment income of $500,000 for the current tax year. This amount represents 18% of their total income.

a) What type of tax is imposed on this organization associated with its investment income?

b) Is the receipt of this investment income likely to result in the organization losing its exempt status? Why or why not?

c) Would your answers in parts (a) and (b) change if the $500,000 represented greater than 50% of the organization's exempt total income? Explain.

Answer 1

Answer:

An element framed under § 501(c)(3) is an absolved substance on doing of altruistic exercises. In the event that any excluded substance produces wage random to association's absolved object, is liable to government salary impose.

Answer a:

Under the above conditions, S.Inc. is liable to government wage charge.

Answer b:

Receipt of this salary does not result in S, Inc, status of excluded. In detail, for later years S. inc.can profit excluded advantage for beneficent exercises however not pay related exercises.

Answer c:

The appropriate response would not changed even $500,000 spoke to more prominent than half of nightfall's aggregate wage.