1.) Which of the following statements regarding the assessment of penalties is c
ID: 2586369 • Letter: 1
Question
1.) Which of the following statements regarding the assessment of penalties is correct?
A.) Section 6651 provides for penalties for both late filing and late payment.
B) Penalties apply to the willful attempt to evade payment of estate and GST tax.
C.) A late-filing penalty will not be imposed if the taxpayer can show that the failure to file a timely return is due to reasonable cause.
D.) All of the above statements are correct.
2.) Which of the following is not one of the three unrelated business income activity categories?
A.) The organization must be conducting a trade or business, including activities (even if unprofitable) carried on for the production of income from selling goods or performing services.
B.) An activity carried on by an IRC §501(c)(3) entity or by a governmental college or university, primarily for the convenience of its members, students, patients, officers, or employees.
C.) The trade or business must be regularly carried on (that is, the activity’s frequency, continuity, and manner of conduct are comparable to the commercial operations of similar for-profit entities).
D.) The activity is not substantially related to the organization’s exempt purpose. This means the activity does not contribute importantly to the exempt purposes.
Explanation / Answer
1) Option D is correct i.e All of the above statements are correct.
Section 6651 provides for penalties for both late filings and late payment unless there is reasonable cause for delay. The law also provides for penalties for wilful attempts to evade payment of tax. The late filing penalty will not be imposed if the taxpayer can show that the failure to me a timely return is due to reasonable cause.
2) Option B is correct i.e An activity carried on by an IRC 501(c)(3) entity or by a governmental college or university, primarily for the convenience of its members, students, patients, officers, officers or employees which is one of the type of organisation which are tax exempt under IRC and not one of the condition for unrelated business income activity categories.
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