Accounting which public charity has unrelated business income?(1) wear it proud , a charity which operates a retail store in which they sell donated merchandise. (2) Vets for pets, a charity which operates a snack bar on site forthe use of members.(3)spirit Boosters, a charity which raises funds by charging for parking during sporting events At thenearby stadium.(4)Operation Wilderness, a charity which operates a summer day camp that is staffed entirely by volunteers.

Accounting which public charity has unrelated business income?(1) wear it proud , a charity which operates a retail store in which they sell donated merchandise. (2) Vets for pets, a charity which operates a snack bar on site forthe use of members.(3)spirit Boosters, a charity which raises funds by charging for parking during sporting events At thenearby stadium.(4)Operation Wilderness, a charity which operates a summer day camp that is staffed entirely by volunteers.

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter20: Corporations And Parterships

Section: Chapter Questions

Problem 41P

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Which of the following is an example of an unrelated business activity for an exempt organization? All are qualified as tax-exempt organizations under IRC 501(c)(3). Raising Readers, Inc, a literacy program run by volunteers, conducts a bake sale, also run by the volunteers, every month. Meridian Medical Clinic, Inc, a small medical facility located in a rural area, has a small cafeteria for the benefit of the medical personnel and patients. House our Heroes, Inc, an organization to provide shelter for homeless veterans, operates a thrift store that sells donated goods. Boots and Spurs, Inc., an equine rescue organization, operates a food truck in the business district on weekdays throughout the year.
Which of the following activities regularly conducted by a tax-exempt organization will result in unrelated business income?A. Selling items made by persons with disabilities as part of their rehabilitation when the organization is involved exclusively in their rehabilitation.B. Operating a grocery store staffed almost entirely by persons with mental health conditions as part of a therapeutic program.C. Regularly holding a casino night fundraiser that is open to the public but staffed entirely by unpaid volunteers.D. Selling pet boarding and grooming services to the general public when the organization is involved in preventing cruelty to animals.
A private not-for-profit entity has the following activities performed by volunteers who work at no charge. In which case should no contribution be reported? Choose the correct.a. A carpenter builds a porch on the back of one building so that patients can sit outside.b. An accountant does the organization’s financial reporting.c. A local librarian comes each day to read to the patients.d. A computer expert repairs the organization’s computer.
For each of the following organizations, determine its UBTI and any related UBIT. Connect, Inc., an exempt organization, provides food for the homeless. It oper- ates a thrift store that sells used clothing to the general public. The thrift shop is staffed solely by four salaried employees. All of the clothes it sells are received as contributions. The $100,000 profit generated for the year by the thrift shop is used in Connect’s mission of providing food to the homeless. Small, Inc., an exempt organization, recorded gross unrelated business income of $900 and unrelated business expenses of $400.
A charitable organization relies for its funding on donations from the general public, which is mainly in the form of cash collected in the streets by volunteers and cheques sent by post to the charity's head office. Wealthy individuals occasionally provide large donations, sometimes on condition that the money is used for specific purpose. The constitution of the charity specifies the purpose of the charity, and also states that no more than 15% of the charity's income each year may be spent on administration costs. Required Identify the inherent risks for this charitable organization that an auditor of its financial statements would need to consider.
Theresa Johnson does volunteer work for a local not-for-profit entity as a community service. She replaces without charge an administrator who would have otherwise been paid $31,000. Which of the following statements is true? Choose the correct.a. The charity should recognize a restricted gain of $31,000.b. The charity should recognize a contribution of $31,000 as an increase in unrestricted net assets as well as salary expense of $31,000.c. The charity should recognize a reduction in expenses of $31,000.d. The charity should make no entry.
A charitable organization relies for its funding on donations from the general public, which is mainly in the form of cash collected in the streets by volunteers and cheques sent by post to the charity’s head office. Wealthy individuals occasionally provide large donations, sometimes on condition that the money is used for specific purpose. The constitution of the charity specifies the purpose of the charity, and also states that no more than 15% of the charity’s income each year may be spent on administration costs.Identify the inherent risks for this charitable organization that an auditor of its financial statements would need to consider.
For each of the following organizations, determine its UBTI and any related UBIT. a. AIDS, Inc., an exempt charitable organization that provides support for indivi- duals with AIDS, operates a retail medical supply store open to the general public. The net income of the store, before any Federal income taxes, is $305,000. b. Andrew Episcopal Church operates a retail gift shop. The inventory consists of the typical items sold by commercial gift shops in the city. The director of the gift shop estimates that 80% of the gift shop sales are to tourists and 20% are to church members. The net income of the gift shop, before the salaries of the three gift shop employees and any Federal income taxes, is $300,000. The salaries of the employees total $80,000. c. Innovation University, Inc., a private institution, has placed vending machines in the student dormitories and academic buildings on campus. In recognition of recent tuition increases, the university has adopted a policy of merely trying…
A private not-for-profit entity has the following activities performed by volunteers who work at no charge. In which case should no contribution be reported? A carpenter builds a porch on the back of one building so that patients can sit outside. An accountant does the organization’s financial reporting. A local librarian comes each day to read to the patients. A computer expert repairs the organization’s computer.
Theresa Johnson does volunteer work for a local not-for-profit entity as a community service. She replaces without charge an administrator who would have otherwise been paid $31,000. Which of the following statements is true? The charity should recognize a restricted gain of $31,000. The charity should recognize a contribution of $31,000 as an increase in unrestricted net assets as well as salary expense of $31,000. The charity should recognize a reduction in expenses of $31,000. The charity should make no entry.
The YuRaeKa charity was established in 1960. The charity’s aim is to provide support to children from disadvantaged backgrounds who wish to take part in sports such as tennis, badminton, squash, basketball and football. YuRaeKa has a detailed constitution[1] which explains how the charity’s income can be spent. The constitution also notes that administration expenditure cannot exceed 10% of income in any year. The charity’s income is derived wholly from voluntary donations. Sources of donations include: (i) Cash collected by volunteers asking the public for donations in shopping areas, (ii) Cheques sent to the charity’s head office, (iii) Donations from generous individuals. Some of these donations have specific clauses attached to them indicating that the initial amount donated (capital) cannot be spent and that the income (interest) from the donation must be spent on specific activities, for example, provision of sports equipment. The rules regarding the…
Soley is a charity (an NGO) whose constitution requires that it raises funds for educational projects. These projects seek to educate children and support teachers in certain countries. Charities in the country from which Soley operates have recently become subject to new audit and accounting regulations. Charity income consists of cash collections at fund raising events, telephone appeals and bequests. (Money left to the charity by deceased persons).The charity is small and trustees do not consider that the charity can afford to employ a qualified accountant. The charity employs a part time bookkeeper and relies on volunteers for fund raising.Your firm has been appointed as accountants and auditors to this charity because of the new regulations. Accounts have been prepared but not audited in the past by a volunteer who is a recently retired Chartered Accountant.a. Discuss the risks associated with the audit of Soley under headings Inherent risk, Control risk and Detection risk and…