The Ultimate Ways To Be Tax Exempt Quiz
by Staff
Are you a member off a group that has tax-exempt status with the federal government? If your group or organization is paying federal taxes, then you should explore tax-exempt status. See how much you know about ways to be tax-exempt by taking this quiz.

An organization is probably not qualified to receive tax-exempt status if it:

  • has more than $5,000 in reserve funds at any given time
  • sells items or services in order to raise funds
  • makes money on behalf of its leaders or members

Are groups that exhibit livestock or farm products allowed to obtain tax-exempt status?

  • yes
  • no
  • only if they do not charge admission

Is a group that sponsors horseracing allowed to enjoy tax-exempt status?

  • yes
  • no
  • only if the purse is under $250

What is a general restriction to any given church having tax-exempt status?

  • A tax-exempt church must not have fewer than 100 active members.
  • A tax-exempt church must not be involved in real estate transactions.
  • A tax-exempt church must not be involved in a political campaign.

In the Internal Revenue Code, is the definition of a “church” intended to include synagogues and mosques?

  • yes
  • no
  • only if they have more than 100 active members

What is a benefit to churches in obtaining a tax-exempt status from the IRS?

  • They must obtain tax-exempt status in order to avoid paying taxes.
  • People that make financial contributions to tax-exempt churches can claim tax-deductions.
  • Offerings collected are not taxable as long as the church has official tax-exempt status.

What is a requirement incumbent upon a fraternal order to obtain tax-exempt status?

  • Fraternal orders must be organized under a lodge system.
  • Fraternal orders must hold meetings monthly and maintain formal meeting minutes.
  • Fraternal orders must be nondiscriminatory regarding race and color.

Are fraternal organizations permitted to offer members benefits such as group health and life insurance?

  • All tax-exempt fraternal organizations are permitted to offer benefits.
  • Tax-exempt fraternal organizations are not permitted to offer benefits.
  • They may only offer benefits if classed as a beneficiary fraternal organization.

Under what category could places like museums and zoos fit in order to obtain tax-exempt status?

  • agricultural organization
  • educational organization
  • horticultural organization

What organization would not normally qualify in the educational category even though they offer courses or lectures?

  • presents on-line classes
  • presents unsupported viewpoints
  • presents political classes

What is the U.S. federal tax code definition of a social welfare organization?

  • Organizations created to contribute to the well-being of a community.
  • Organizations created to foster urban renewal projects in dilapidated communities.
  • Organizations created to operate private airports on behalf of clubs and flight organizations.

Under federal law, is a labor organization permitted to maintain tax-exempt status?

  • A labor organization can be tax-exempt only if it also produces a newspaper that covers labor issues.
  • Labor organizations are not permitted to have tax-exempt status.
  • A labor organization may be tax-exempt if it engages in collective bargaining and maintains a strike fund.

Under the tax code, is a tax-exempt social club permitted to restrict membership by religion?

  • Yes, religion can be used as a membership criteria without any restrictions.
  • Membership restrictions may not be based on religion.
  • They may restrict membership to particular religion only if the shared religion is the main purpose of the club.

Which of the following is not considered eligible for tax-exempt status as a social club?

  • any country club with restricted membership
  • any dinner club that restricts membership
  • any clubs with income that reduces member dues

According to the U.S. tax law, what percentage of membership in a veterans group must be U.S armed forces veterans or current members?

  • 100 percent
  • 75 percent
  • 50 percent

Which of the following activities are not considered an eligible veterans group function?

  • activities of a patriotic nature
  • recreational activities for veterans
  • investment programs for veterans

How can an organization that has a purpose to conduct scientific research qualify for tax-exempt status under federal law?

  • Only companies doing scientific research to cure major diseases can receive tax-exempt status.
  • Organizations doing scientific research with results openly available to the public receive tax-exempt status.
  • Only companies conducting scientific research in a field related to medicine may receive tax-exempt status.

Tax-exemption law defines a trade association as:

  • a group of people with a common business interest
  • a group of people that trade investment quality collectables that are not for sale
  • a group of people that sponsors professional lobbyists to champion their causes

What section of the U.S. Internal Revenue Code applies to determining a tax-exempt organization?

  • 401(k)
  • 501(c)
  • 560(b)

How many types of organizations does the United States Internal Revenue Code 501(c) list as possible tax-exempt entities?

  • 19
  • 28
  • 37