7.2.8 Basic Quiz -- Reorganization and Termination

Once created, a private foundation may not transform itself into a public charity.

True False

When converting to a public charity, a private foundation need not notify the IRS of its intention to do so until after the foundation has converted.

True False

A private foundation may voluntarily convert to a taxable organization in order to engage in activities that are proscribed in its organizational documents.

True False

The termination tax imposed on private foundations for involuntary termination of their charitable status is equal to the lesser of the foundations' assets or the total tax benefits the foundations received by way of their tax-exempt status.

True False

The "Because" Foundation is being involuntarily converted to a taxable organization for repeated failures to adhere to the regulations imposed on private foundations. There is no way in which the "Because" Foundation can avoid the termination tax imposed by the IRS.

True False

If a private foundation decides to merge with another private foundation, it must notify the IRS, transfer all of its assets and remain in existence.

True False

"Be," a private foundation, has decided to merge with the "Cause" Foundation. "Be" transfers all of its assets to "Cause" and then terminates its own private foundation status. As a result, "Be" will owe no termination tax.

True False

The trustees of "Because," a private foundation, are unable to agree on how to best use the foundation's funds to further its charitable purpose. Unfortunately, it is impermissible for a private foundations to divide into separate foundation and separate the foundation's assets.

True False

The "Because" Foundation decided to split into two separate private foundations. The newly created foundation, "Cause," is entitled to a pro-rata portion of the original foundation's tax benefit.

True False

The "Because" Foundation's charitable purpose was to eradicate the polio virus from America. With this job completed, "Because" has decided to terminate operations by distributing all of its assets to a public charity. "Because" does not need to notify the IRS.