Engaging in a Prohibited Transaction Can Result in an Exempt

question 19

True/False

Engaging in a prohibited transaction can result in an exempt organization being subject to Federal income tax, but such an act cannot cause the entity to lose its exempt status unless the exempt organization repeats the prohibited transaction.

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Definitions:

Combined Margin

A metric that combines multiple types of profit margins (such as gross, operating, or net margin) to assess overall performance.

Contribution Margin Ratio

The percentage of sales revenue remaining after variable costs are deducted, indicating how much contributes to fixed costs and profit.

Fixed Expenses

Costs that do not change with the level of production or sales over a certain period, such as rent, salaries, and insurance.

Sales

The total amount received from selling goods or services over a given period.