Question

1. while us public charities, like kaiser foundation hospitals, must file form 990 yearly with the irs, private foundations, such as the gordon and betty moore foundation, must file a different form, form 990 - pf. in addition, foundations that engage in certain prohibited activities must also file form 4720 and pay a penalty tax on the money involved. private foundations are prohibited from holding excess interests in a business enterprise, \self - dealing\ (conducting activities that benefit foundation insiders), making taxable expenditures such as outlays for lobbying, and failing to cross a required threshold in making charitable distributions from income. out of the organizations that filed form 990 - pf in the years 2003 - 2005, which choice most effectively uses data from the graph to complete the assertion? a) those that also filed form 4720 paid a larger penalty for failing to meet a minimum charitable distribution requirement than those organizations that filed form 990 but also filed form 4720 for the same reason. b) a smaller percentage of those that also filed form 4720 did so because they held excess interests in a business enterprise than the percentage of those that filed form 4720 because they did not meet the minimum charitable distribution requirement. c) those that were also required to file form 4720 because they had excess holdings in a business enterprise paid, on average, a larger penalty than those organizations that filed form 4720 because they made taxable expenditures.

Explanation:

Analyze each option by referring to the graph data about reasons for tax - penalty and the information about Form 472. Option A has no basis in the graph as there's no comparison between Form 990 and Form 472 filers for minimum charitable distribution. Option C has no data in the graph to compare penalties for different reasons among Form 472 filers. Option B is correct as the graph shows a smaller bar for "excess interests in a business enterprise" compared to "did not meet minimum charitable distribution requirement" among reasons for tax - penalty for organizations related to Form 472.

Answer:

B. a smaller percentage of those that also filed Form 472 did so because they held excess interests in a business enterprise than the percentage of those that filed Form 472 because they did not meet the minimum charitable distribution requirement.