Question
You have recently discovered that a local business has been designated 501(c)(3). Which of the following must be true?(1 point)
Responses
The business has federal tax exemptions.
The business has federal tax exemptions.
The business is a private foundation.
The business is a private foundation.
The business is a public charity.
The business is a public charity.
The business does not earn profits.
Responses
The business has federal tax exemptions.
The business has federal tax exemptions.
The business is a private foundation.
The business is a private foundation.
The business is a public charity.
The business is a public charity.
The business does not earn profits.
Answers
GPT-4o mini
The correct response is:
**The business has federal tax exemptions.**
A 501(c)(3) designation indicates that the organization is recognized by the Internal Revenue Service (IRS) as a tax-exempt nonprofit entity, which means it does have federal tax exemptions. The other statements may not necessarily be true; for instance, not all 501(c)(3) organizations are public charities or private foundations, and they can earn profits as long as those profits are used for the organization's exempt purposes.
**The business has federal tax exemptions.**
A 501(c)(3) designation indicates that the organization is recognized by the Internal Revenue Service (IRS) as a tax-exempt nonprofit entity, which means it does have federal tax exemptions. The other statements may not necessarily be true; for instance, not all 501(c)(3) organizations are public charities or private foundations, and they can earn profits as long as those profits are used for the organization's exempt purposes.