Detailed Answer
(a) The requirement is to determine the correct statement
regarding qualification as an exempt organization. To
qualify as an exempt organization, the applicant for exemption
must fall into one of the specified classes of organizations that are
listed in Sec. 501 as being exempt from tax. Answer (d) is incorrect
because a social club can be an exempt organization as long
as substantially all its activities are for such purposes and no part
of its net earnings inures to the benefit of any private shareholder.
Answer (c) is incorrect because most exempt organizations are
permitted specified levels of lobbying expenditures, and can even
elect to be subject to a tax equal to 25% of their excess lobbying
expenditures to prevent loss of exempt status. Answer (b) is
incorrect because foreign corporations can qualify as exempt
organizations.
