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:

Shutdown Point

The level of production and price at which the revenue received does not cover the variable costs, making further production unprofitable.

ATC (Average Total Cost)

The total cost of production divided by the quantity produced, representing the cost per unit of output.

MC (Marginal Cost)

Expenses incurred from making one more unit of a product or service.

Break-Even

The point at which total costs and total revenue are equal, meaning there is no net loss or gain, and the business or investment is self-sustaining.