Faith Community Church is exempt from Federal icome taxation under section 501(c)(3). To supplement its contribution revenue, it holds bingo games on Saturday nights. It holds all of the licenses and permits required to do so. The net income from the bingo games is $90,000. Of these funds $60,000 are used to support the ministry of the church. the balance of $30,000 is invested in Faith's endowment fund for church music. Faith Community Church is located in a resort city where bingo fames can be conducted by churches, charities, and for-profit entities.

a. Will conducting the bingo games affect the exempt status of Faith Community Church? Explain.

b. Calculate the Federal tax liability, if any, associated with the bingo games.