Which of the Following Is Not Accurate with Respect to Unrelated

question 106

Multiple Choice

Which of the following is not accurate with respect to unrelated business income for a 501c3organization?

• A) A tax-exempt organization is required to pay tax at the corporate on income generated from any trade or business activities unrelated to the entity's tax-exempt purposes.
• B) The purpose of the requirement to tax unrelated business income of a 501c3 organization is to eliminate advantages that have over profit-making organizations
• C) As long as the proceeds are used to further the tax exempt organization's purpose, the income will not be taxed.
• D) If volunteers perform most of the labor, income-producing activities from will be exempt from unrelated business income tax.

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Definitions:

Employer's Payroll Tax

Taxes that employers are required to pay on behalf of their employees, based on the salary the employees earn, including social security and Medicare taxes in the United States.

Federal Unemployment Tax

A tax paid by employers to fund the unemployment benefits provided to workers who have lost their jobs.

State Unemployment Tax

A tax imposed by state governments on employers to fund unemployment insurance benefits for laid-off workers.

Payroll Deductions

Monies withheld from an employee’s paycheck by the employer for taxes, insurance premiums, retirement fund contributions, and other purposes.