1) Which of the following statements regarding C corporations is FALSE?

A. C corporations are generally not subject to corporate income tax.

B. C corporations are separate entities for tax purposes.

C. Shareholders of a C corporation have limited liability.

D. Shareholders of a C corporation are taxed only when the corporation distributes earnings and profits.

2.) 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.

3.) 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 activitys 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 organizations exempt purpose. This means the activity does not contribute importantly to the exempt purposes.