Which of the Following Is a Prohibited Activity for a Tax-Exempt

question 77

Multiple Choice

Which of the following is a prohibited activity for a Tax-exempt Organization?

• A) Make a Profit.
• B) File a tax return.
• C) Give money away.
• D) Make financial contributions to a political candidate.

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Definitions:

Declaration

An official announcement or formal statement, often used in the context of declaring dividends to be paid to shareholders.

Cash Dividend

A Cash Dividend is a payment made by a company out of its earnings to investors in the form of cash.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenues.

Common Stock

A type of security that represents ownership in a corporation, entitling the owner to vote at shareholders' meetings and receive dividends.