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:

Significant Changes

Important alterations that can have a substantial impact on a company's operations, financial performance, or strategy.

Balance Sheet Components

The major sections of a balance sheet, typically including assets, liabilities, and shareholders' equity.

Average Operating Assets

The average value of assets utilized in the regular operations of a business to generate earnings, calculated over a certain period.

Minimum Required Rate Of Return

The lowest acceptable return on an investment, determined by the investor’s preferences, risks, and opportunity costs.