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GiftLaw Pro Home   >  Chapter 7 - Charitable Organizations  >  7.2 Private Foundations  >  7.2.7 Tax on Net Investment Income  >  Basic Quiz

Basic Quiz - 7.2.7 Tax on Net Investment Income

1. Sec. 4940(c) of the Internal Revenue Code sets forth guidelines for calculating net investment income.
           
2. Private foundations are taxed on net investment income at a 30% rate.
           
3. Under certain circumstances, some private foundations will be required to pay only 1% on their net investment income.
           
4. "The gross amount of income from interest, dividends, rents, payments with respect to securities loans, and royalties, but not including any such income to the extent in computing the tax imposed by Sec. 511" is the definition of qualifying expenses.
           
5. For purposes of calculating net investment income, capital losses are allowed to exceed capital gains.
           
6. Capital losses can be carried over for five years.
           
7. Ordinary and necessary expenses are used in the calculation of excise taxes.
           
8. "Average payout percentage" is the average of the percentage payouts for tax years contained in the base period.
           
9. "Base period" is defined as the nine taxable years preceding the current taxable year.
           
10. Net investment income includes dividends.