Which of the Following Statements Is Correct Regarding the Unrelated

question 90

Multiple Choice

Which of the following statements is correct regarding the unrelated business income tax (UBIT) ?

• A) To be subject to the UBIT, the exempt organization must conduct a trade or business, the trade or business is not substantially related to the exempt purpose of the organization, and the trade or business is regularly carried on by the organization.
• B) To be subject to the UBIT, the exempt organization must conduct a trade or business, the trade or business must be substantially related to the exempt purpose of the organization, and the trade or business must be regularly carried on by the organization.
• C) To be subject to the UBIT, the exempt organization must conduct a trade or business, the trade or business is not substantially related to the exempt purpose of the organization, and the trade or business is carried on during more than half the year.
• D) An exempt entity that conducts a business that competes with for-profit businesses automatically is subject to the UBIT.
• E) None of the above statements is correct.

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Definitions:

Call Option

An agreement that grants the purchaser the option, not the compulsion, to acquire an asset at a predetermined price during a defined timeframe.

Exercise Price

The specified price at which the holder of an option can buy (call option) or sell (put option) the underlying security or commodity.

Risk-Free Rate

The theoretical return on an investment with no risk of financial loss, typically represented by government bonds.

Market Value

The current price at which an asset or service can be bought or sold in a market.