To Satisfy the Broadly Supported Provision to Avoid Classification as a Private

question 84

True/False

To satisfy the broadly supported provision to avoid classification as a private foundation, an exempt organization must satisfy both an external support test and an internal support test. Under the internal support test, more than one- third of the exempt organization's support for the taxable year must come from gross investment income and unrelated business taxable income.

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Definitions:

Deferred Tax Liability

A tax obligation that arises from temporary differences between accounting and tax calculations, to be paid in the future.

Unearned Revenue

This is income received by a business for goods or services yet to be delivered or performed. It's considered a liability until the product or service is delivered.

Cash Payment

A transaction in which a payment is made using physical currency or through a digital cash transfer rather than credit.

Deferred Tax Asset

An asset on a company's balance sheet that may be used to reduce future tax liability; it arises when a company has overpaid taxes or paid them in advance.