What Happened to the Tax Exemption? the Case of the Rice Tabernacle Church

By Alleyne, Beverley J.; Elson, Raymond J. | Journal of the International Academy for Case Studies, May 2015 | Go to article overview

What Happened to the Tax Exemption? the Case of the Rice Tabernacle Church


Alleyne, Beverley J., Elson, Raymond J., Journal of the International Academy for Case Studies


INSTRUCTORS' NOTES

Recommendations for Teaching Approaches

The objective of the case is to help students understand the importance of understanding the tax consequences of business decisions in nonprofit organizations. This case is flexible and could be used in a number of courses at the senior or graduate level. For instance, it is ideal for a discrete government and nonprofit accounting class or the nonprofit portion of the advanced accounting class. Students may need to supplement classroom discussions by researching applicable nonprofit organization and taxation issues in the Internal Revenue Code or other third party sources. The references provided at the end of the teaching note could serve as a starting point.

The case is best completed in groups either as an in-class or out of class graded assignment. The group size, grading scale and assigned points is at the specific instructor's discretion. If completed in class, the case should be read prior to class by the students and the discussion questions answered in class. It should take approximately one hour to complete the discussion and no advanced preparation time is required by the instructor.

Learning Outcomes

Students should be able to:

1. Identify the organizational and tax reporting issues in nonprofit organizations especially religious organizations.

2. Understand the impact of non-mission based activities on religious organizations.

Case Implementation and Effectiveness

The case was tested using graduate government and nonprofit accounting students (n=20) at a regional university during the summer 2014. The case was assigned as a non-graded project and students read the case outside of class prior to the in-class debriefing. The lack of a grade did not create a barrier since the students have a good relationship with the course instructor and willing participated in the exercise. The students reported that it took approximately 15 minutes to read the case, and that was it interesting and easy to follow. The students were very curious about the tax resolution since this was not discussed in the case. The students also noted that the case effectively illustrated the pitfalls facing a religious organization when they expand in activities outside of their mission.

DISCUSSION QUESTIONS

The following are proposed solutions to the discussion questions in the case. The answers are not intended to be all inclusive.

1. Was the church properly established for federal tax purposes?

Yes. Churches and religious organizations, quality for tax exemption under IRC Section 501(c)(3), and are generally eligible to receive tax-deductible contributions. Unlike other charitable organizations, churches are automatically considered exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS.

Rice Tabernacle could elect to seek recognition of exempt status from the IRS. The church would apply for exemption using Form 1023 or 1023 EZ which was recently released by the IRS to streamline the tax exemption application process. Filing for tax exemption would assure the board of directors, members and contributors, and the local property tax board, that Rice Tabernacle is tax-exempted and qualifies for related tax benefits.

Rice Tabernacle's status as a valid tax exempt organization was not discussed in the case and it was already recognized as such by the local property tax board through its initial tax relief. The reader could infer that the church was properly established for federal tax purposes.

2. Should the State Board of Equalization be consulted prior to the expansion?

The answer might vary by student. However, if the State Board of Equalization commonly provides such consulting services, they should have been consulted. However, if it is not common practice such consultation cannot be expected. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

What Happened to the Tax Exemption? the Case of the Rice Tabernacle Church
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.