Wellness, Inc., a 501(c)(3) organization, makes lobbying expenditures of $340,000 this year. Exempt purpose expenditures were $600,000 for the first six months of the year and $950,000 for the last six months of the year.

a. Determine the Federal income tax consequences to Wellness if it does not make the 501(h) lobbying election. Wellness, Inc. is assessed a penalty tax of $.

b. Determine the Federal income tax consequences to Wellness if it does make the 501(h) lobbying election.

If Wellness makes the 501(h) election, it is eligible to make lobbying expenditures on

basis.

Wellness is assessed a tax on the excess lobbying expenditures and the amount of tax is $.