Which of the following activities could jeopardize a §501(c)(3) organization's tax-exempt status?

Answer options:

Paying reasonable salaries to employees.

Generating a small amount of UBI.

Endorsing a candidate for political office.

Lobbying on legislation (insubstantial amount).

How to approach this question

Recall the absolute ban on political campaign intervention for 501(c)(3)s.

Full Answer

C.Endorsing a candidate for political office.✓ Correct

IRC §501(c)(3). Participation in political campaigns is an absolute bar to exemption. Lobbying is allowed if insubstantial, but campaigning is zero-tolerance.

Common mistakes

Confusing lobbying (allowed in moderation) with campaigning (banned).

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