Quick Notes

One-liners — the rule each exam question was really testing, one sentence each, brought current to 2026. The tag gives the question and the answer. Final is the printed 61-question bank for the Checkpoint Learning final (I scored 83, all answers marked); marked means the answer is the letter circled on my printout; corrected means I crossed out my first answer and circled another in blue, and the blue one is used; review is a chapter review question clipped into my notes with the course’s own explanation; SQ is an end-of-chapter study question whose answer was worked from the text. Where a 2021 figure has moved, the 2026 figure follows.

Getting exempt

• An organization founded to feed and assist the homeless is charitable; a social club, a fraternal organization and a professional sports league are exempt under other paragraphs, not charitable. [Final Q1, D; marked]
• A charity with gross receipts normally not more than $5,000 a year need not file Form 1023 to be exempt (nor need a church); it still must file the 990 series. [Final Q2, B; marked]
• Form 1024 has been electronic since January 3, 2022 (90-day paper grace at the time); it is for non-(c)(3), non-(c)(4) organizations, is optional for most of them, and is not the way to get charitable status. [Final Q3, C; corrected]
• A (c)(3) may lobby a limited amount; it may neither lobby without limit nor never lobby. [Final Q4, C; marked]
• The IRS expedites a Form 1023 for a pending grant that threatens operations, for disaster relief, or for its own delay; not for an extra fee. [Final Q5, D; marked]
• Form 4506-B gets a copy of an organization’s own application and determination letter; 4506-A gets filed returns; TEOS has letters since 2014 and returns since 2017. [Final Q6, D; marked]
• Form 1023 Part IV describes past, present and planned substantial activities, not speculative ones. [Final Q7, D; marked]
• A (c)(4) seeks its determination letter on Form 1024-A; its donors get no deduction and its income is exempt. [Final Q8, B; corrected]
• A non-charitable organization seeking recognition normally files Form 1024. [Final Q9, C; marked]
• A new charity keeps public charity status for its first five years regardless of actual support; the test starts in year six on Schedule A. [Final Q10, C; marked; Final Q33, C; marked]
• A (c)(4) must file Form 8976 within 60 days of formation and may file Form 1024-A for a letter. [Final Q11, B; marked]
• File Form 1023 within 27 months after the end of the month of formation and exemption is retroactive to formation. [Final Q12, D; marked]
• Three consecutive missed 990-series filings and exemption is revoked automatically. [Final Q13, C; marked]
• Form 1023’s specific-activities questions cover foreign activities, gaming and bingo, and influencing legislation; joint ventures with other (c)(3)s are not on the list (joint ventures with non-(c)(3)s are). [Final Q14, C; corrected, marks messy]
• A partnership cannot be a (c)(3); a corporation, trust, association or all-(c)(3) LLC can. [SQ 4, A]
• The organizing document must limit purposes to those in §501(c)(3) (by reference is fine), must not empower substantial non-exempt activity, and must dedicate assets permanently. [SQ 6, A]
• Missing bylaws delays an application; a treasurer or vice president may sign. [SQ 3, D]
• A conflict-of-interest policy is not required for exemption and does not confer it; it keeps insiders from inappropriate benefits. [SQ 5, B]

Public charity or private foundation

• A church is a public charity; a substantial lobbyist is not a (c)(3); a family foundation is a private foundation. [SQ 2, B]
• A private foundation is the vehicle for a wealthy family’s giving; it files 990-PF, and its donors get 30% / 20% limits. [SQ 14, D; review image11, D]
• Under §509(a)(1), pass the 33⅓% test or the 10% facts-and-circumstances test. [Final Q32, B; marked]
• For 2021 (and now), an organization is publicly supported if it passes the test for the current year or the immediately prior year, each on a five-year computation. [Final Q41, C; marked]
• Schedule A is where the private-foundation-or-public-charity determination is made every year. [Final Q28, A; marked]
• A school must have a racially nondiscriminatory policy; formal instruction is its primary function; it need not do anything non-educational. [Final Q29, C; marked]
• A community elementary school associated with a church is not one of the IRS’s church characteristics; a recognized form of worship, a distinct religious history and a regular congregation are. [Final Q30, A; marked]
• A cooperative hospital service organization may not provide laundry services and keep public charity status; billing, personnel training and industrial engineering are allowed. [Final Q31, A; marked]
• A rehabilitation institution may be a hospital; a medical school, a medical research organization and a vocational training institution are not. [SQ 15, A]
• Type I supporting organization: operated, supervised or controlled directly by its supported organizations. [SQ 16, A; review image12, A]
• A trustee’s cousin is not a disqualified person for §509(a)(3) control; a substantial contributor, a director and an officer are. [SQ 17, D]

Which return, and when

• The 990 requires information about governance policies and practices; not SSNs of everyone paid, not the top 200 employees, not names of people assisted. [Final Q15, B; corrected]
• Gross receipts are the total amounts received from all sources during the year without subtracting any costs or expenses. [Final Q16, A; marked]
• The failure-to-file penalty was $20 a day up to the lesser of $10,500 or 5% of gross receipts; for 2026 it is $25 a day up to $13,000 or 5%, and $130 a day up to $66,500 over $1,339,500 of receipts. [Final Q17, B; marked; updated]
• Receipts over $50,000 but under $200,000 and assets under $500,000: Form 990-EZ or the full 990. [Final Q18, D; marked]
• Form 990 is due the 15th day of the 5th month after year-end. [Final Q19, B; marked]
• Every organization must e-file its Form 990 for years beginning in 2020 and after. [Final Q21, D; marked]
• The Red Cross and Habitat for Humanity file; a convention of churches, a state political party committee, a governmental unit, a caucus of state or local officials, a religious-order grade school and a §115 institution do not. [Final Q24, A; Q27, D; marked]
• An amended 990 is a complete return with all schedules and a Schedule O disclosure of the changes. [Final Q25, C; marked]
• A donor-advised-fund sponsor files the full 990, never the EZ or the N. [SQ 8, C; review image4, C]
• The 990-EZ cannot be filed by every exempt organization; under $200,000 and $500,000 only, and not by DAF sponsors or hospitals. [SQ 11, C; review image7, C]
• Filing the 990-N is not voluntary; three missed years ends the exemption. [SQ 13, C; review image9, C]
• Many Part VI governance questions concern practices not required by federal tax law; all organizations answer all of them. [SQ 7, A; review image2, A]
• The 990 does not require a whistleblower policy; it asks whether one exists. [SQ 12, D; review image8, D]

The core form

• Officer and director compensation is reported on Part VII and may also be required on Schedule J. [Final Q20, C; marked]
• Fundraising events generate two kinds of revenue: contributions and income. [Final Q22, A; marked]
• Part IX’s functional expense categories are program services, management and general, and fundraising; there is no UBTI column. [Final Q23, B; marked]
• Contributions from auctions go on Part VIII line 1c, fundraising events (the retail value of what the bidder got goes on line 8a). [Final Q26, C; marked]
• Part III describes the three largest program services by expense. [SQ 9, B; review image5, B]
• Charitable contributions are not revenue for Part III; fees, sales and exploited-function UBI are. [SQ 10, D; review image6, D]

The schedules

• Only (c)(3)s (and §527s) report donor names and addresses on Schedule B; (c)(4)s, (c)(5)s and (c)(7)s report amounts only. [Final Q34, D; corrected]
• An established charge for a charity event is the value of the donor’s benefit; only the excess is a gift; not using the ticket changes nothing. [Final Q35, B; marked; SQ 19, D; review image13, D]
• Paying fair rental value at a charity auction for a week at a beach house is no contribution at all. [Final Q36, A; marked]
• A payment to a college for the right to buy athletic tickets deducts nothing since 2018; tuition is never a gift. [Final Q37, A; corrected]
• Property worth less than basis deducts at fair market value; the lost basis is not a deduction. [Final Q38, A; marked]
• Cash to a 50%/60% charity was deductible to 100% of AGI in 2021 only; 60% is the permanent limit from 2026, after a 0.5%-of-AGI floor. [Final Q39, A; corrected; updated]
• A contribution is deducted in the year actually made — cash and accrual donors alike, mailed checks when mailed, cards when charged. [Final Q40, B; marked]
• Grassroots lobbying tries to influence legislation by swaying the public and urging them to act; direct lobbying is communication with a member of a legislative body. [Final Q42, A; corrected; Q45, B; marked]
• A term endowment provides income for a specified period. [Final Q43, A; marked]
• A program-related investment is made primarily to accomplish the exempt purpose, not to produce income. [Final Q44, B; marked]
• $95 for a church dinner-dance worth $35 is a $60 gift. [SQ 18, B]
• Appraisal fees are not a charitable contribution; dues, the excess of a benefit payment and charitable travel are, in part or whole. [SQ 20, D; review image14, D]
• Cash to a university is a 60%-limit gift; cash to a cemetery or fraternal society is 30%; capital-gain property to a private non-operating foundation is 20%. [SQ 21, A; review image15, A]
• Nonpartisan analysis made available to the public is neither direct nor grassroots lobbying, even if it takes a position, given a full and fair exposition of the facts. [SQ 22, C; review image16, C]
• Gaming is not a fundraising activity (except gaming incidental to an event); maintaining the donor list, preparing a fundraising manual and soliciting time are. [SQ 23, B; review image17, B]
• More than $25,000 of noncash contributions in the year means Schedule M, with the valuation methods; Schedule B does not excuse it. [SQ 24, B; review image18, B]

Unrelated business income

• The 990-T is due the 15th day of the 5th month for an exempt organization; a Roth IRA, a Coverdell ESA and a SEP are due the 15th day of the 4th month. [Final Q46, C; corrected; SQ 33, A]
• Unrelated business income comes from a trade or business regularly carried on and not substantially related; it need not be produced for an educational function and an occasional activity is not regular. [Final Q47, A; marked; SQ 25, B; review image21, B]
• UBTI at 15% or more of total revenue puts the exemption at risk. [Final Q48, C; marked]
• Expenses of an exempt activity that an unrelated business exploits (the logo on commercial gear) are incidental to the exempt purpose and not deductible against the UBTI. [Final Q49, D; corrected; SQ 30, A; review image23, A]
• Hiring a company to solicit advertising for an annual publication 46 weeks a year is regularly carried on; a yearbook once a year, a two-week fair stand and a Valentine’s dance are not. [Final Q50, D; marked]
• Selling merchandise is not UBTI if at least 85% of it was donated. [Final Q51, B; marked]
• The low-cost article limit was $11.30 for 2021; it is $13.90 for 2026. [Final Q52, D; marked; updated]
• Horticultural and agricultural organizations and business leagues (and charities and social-welfare organizations) are qualified organizations whose trade-show space rental is not UBTI. [Final Q53, D; marked]
• Straight-line depreciation of $30,000 on a building half debt-financed gives a $15,000 deduction; $40,000 one-quarter debt-financed gives $10,000. [Final Q54, B; marked; SQ 35, A]
• Total unrelated business taxable income is Part I line 1 of the core Form 990-T, the sum of the positive Schedule A results. [Final Q55, D; marked]
• A (c)(3)’s 990-T is subject to the 990’s penalties, public inspection and disclosure requirements. [Final Q56, D; marked]
• Maid service is a service rendered to the occupant and takes the payment out of rent; cleaning public space, trash collection at the dumpster and supplying heat are not. [Final Q57, B; marked]
• A corporate exempt organization pays 21% on UBTI. [Final Q58, B; marked]
• Personal-property rents of 10% or less of total rent under a lease are excluded with the real-property rent; over 50% nothing is excluded. [Final Q59, A; marked]
• The specific deduction is $1,000, once per organization. [Final Q60, A; marked]
• More than one unrelated business: a separate Schedule A for each; losses of one never offset income of another. [Final Q61, D; marked; SQ 36, C; review image25, C]
• Dual-use assets are permitted and do not cost the exemption. [SQ 26, B]
• Expenses attributable solely to UBTI are deductible; corporate rules apply; mixed expenses are allocated reasonably. [SQ 27, A]
• A for-profit subsidiary’s income is not attributed to its exempt parent; the parent keeps its exemption and its dividends are excluded. [SQ 28, D; review image22, D]
• A president paid $100,000 spending 20% of her time on the unrelated business: $20,000 deductible. [SQ 29, B]
• Volunteers must do at least 85% of the work for the volunteer exclusion. [SQ 31, D]
• A college, university or hospital excludes all research income and may not deduct the research expenses. [SQ 32, D; review image24, D]
• Rent from personal property not incidental to a real-property lease is UBTI; mailing-list rentals among charities, real-property rent and passive income are not. [SQ 34, B]
• The bingo exclusion is for a church, not a social club, political organization or homeowners’ association. [SQ 37, A]

Private reference, not client advice. Notes taken from a continuing-education course, Form 990: A Practical Guide (Thomson Reuters Checkpoint Learning, 12 hours, 2022 edition written on 2021 law and the 2021 forms). Figures and rules brought current to 2026 in October 2026 (P.L. 119-21, Rev. Proc. 2025-32, T.D. 9933, T.D. 9898, the 2025 form instructions). Items tagged check are to be confirmed against primary sources before they are relied on.