Which of the Following Statements Is Correct Regarding the Unrelated

question 6

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 these statements is correct.

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Definitions:

Relevant Costs

Costs that are directly influenced by a specific business decision, and are crucial for cost-effective management decisions.

Differential Cost

A future cost that differs between any two alternatives.

Alternatives

Alternatives refer to the different options or choices available in decision-making processes.

Unit Production Costs

The total cost incurred to produce, manufacture, or acquire a unit of a product including direct materials, labor, and overhead.