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26 Cards in this Set
- Front
- Back
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What are the rules of operation for a nonprofit
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no political campaigns
lobbying must be insubstantial must operated for its purpose not for profit or private interest |
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How does tp request exempt status
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File form 1023 application for recognition of exemption. Not required is gross receipts of no more than $5K. private foundation must ALWAYS file. Form is due by end of 15 month after creation in order to be considered tax exempt since its creation
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What type of organizations are tax exempt but contributions to them are not deductible by donor
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civic leagues, social welfare org, labor unions, agric orgs, business leagues, social clubs, EE associations, nonprofit cemetery, vet org and credit unions
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What is the primary distinction between classification of private and public charity
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source of financial support
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What returns must be filed by nonprofits
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Form 990, return of organization exempt from income taxes (except churches and government agencies)
If less than $50K can electronically file shortform 990N Due May 15 or (15 of 5 month) |
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What is the failure to file or incorrect information penalty for nonprofit entities
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$20/day with max of lessor $10K or 5% of organizations gross receipts
If receipts are more than $1 million $100/day with max of $50K Exempt status may also be revoked automatically if not filed for 3 years |
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Can an exempt org engage in income producing activities
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Yes as long as it is not a substantial part of the org regular activities
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What must an exempt org do if it has $1K or more of unrelated business income
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File form 990T and make estimated tax payments if it expects tax for year to be $500 or more
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What are the forms that must be filed for exempt org
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Gross Receipts Form
,/= $50K 990N (postcard) $500K receipts AND $,1.25 Million assets 990EX or 990 UBIT of $1K 990T Private Foundation 990PF |
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Who does not have to file a 990
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religious org P
Note private foundations must file regardless of income |
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What is the addition tax if w/d begins within 2 years of participating in a SIMPLE IRA
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25%. Rollovers also cannot be made until after two years of participation
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What are ER requirements of a SIMPLE 401K
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Adopted as part of traditional 401k plan or 100EEs or less and no other qualified retirement plan. Must make matching of up to 3% or nonelective 2%
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What are adv of SIMPLE 401k
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not subject to discrimination rules that apply to traditional 401k plans
offers hardship withdrawals |
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What are disadv of SIMPLE 401k
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no other retirement plans can be maintained
paperwork for loans and w/d |
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What is a traditional 401k plan
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A DC that allows each EE to defer salary
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When does the 10% additional tax for early w/d NOT apply
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4 ira IM 2 HEADED IRS, health insurance , home purchase, education, annuity, disability,Medical military care age annuity or Death,
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When must the first RMD be made
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April 1 of the year following the year of 70 1/2
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What is the limit on benefits in a DB plan
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$205K or 100% of participants average comp
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What is the limit on elective deferrals in a DC plan
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A combined limit of $17.5K for elective deferrals plus catch of $2.5 if SIMPLE or $5.5K if other DC plan
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What is the maximum ER contribution for DC plan
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$51K or 100% of avg compensation ERs deduction for contributions cannot exceed 25% of total compensation. Excess contributions subject to 6% excise tax for EEs and SE and 10% for ERs
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What is the tax on prohibited xaction for each year
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Initially 15%, if not corrected 100% of amount involved
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What is the ER credit for pension startup costs
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50% of cost with max of $500
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Can ER return a salary reduction contribution after it has already deducted it from wages as a SIMPLE IRA plan contribution
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No And if a participant terminates service during the year after making a salary reduction contribution, he would still be entitled to ER contribution, regardless of whether it is matching or nonelective
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When can tp deduct contributions to retirement plan for a particular year
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by due date of return including extensions
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Who are disqualified persons for purposes of prohibited xaction
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fiduciary, ER, 50% owner officer/director, 10% s/h, hce of administering entity
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What happens if eligible EE is unwilling to set up a SIMPLE IRA
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Eligible EEs may NOT opt of of a SIMPLE IRA but may chose not to make salary reduction contributions for a year and consequently EE would accrue no ER matching contributions but would still receive nonelective if ER plan provides for it
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