CNE Nonprofit Tax & Legal Requirements

Question 1

What IRS form must most tax-exempt organizations file annually?

Accepted Answer

Form 990 or a variant

Answer

Form 1040

Answer

Form W-2 only

Answer

Form 1099-MISC

Question 2

What happens if Form 990 isn't filed for three consecutive years?

Accepted Answer

Automatic revocation of tax-exempt status

Answer

A small fine

Answer

A warning letter

Answer

Nothing, filing is optional

Question 3

What is the private benefit doctrine?

Accepted Answer

No part of net earnings may unreasonably benefit private individuals

Answer

A donor tax deduction

Answer

A grant-making restriction

Answer

Unlimited executive compensation rule

Question 4

What is intermediate sanctions (Section 4958)?

Accepted Answer

Excise taxes on excess benefit transactions between the nonprofit and insiders

Answer

Criminal penalties for fraud

Answer

Late filing penalties

Answer

Sanctions on international operations

Question 5

What is unrelated business income tax (UBIT)?

Accepted Answer

Tax on income from business not substantially related to exempt purpose

Answer

Tax on all nonprofit revenue

Answer

Investment tax exemption

Answer

State sales tax

Question 6

Which governance documents are legally required for nonprofits?

Accepted Answer

Articles of incorporation and bylaws

Answer

A strategic plan

Answer

A fundraising plan

Answer

A marketing strategy