What does tax exempt mean on the CPA exam?
Tax exempt. Not subject to tax. For an organization it means exempt from income tax under Sec. 501; for income it means excluded from gross income, such as municipal bond interest.
Defined against Sec. 501.
Which CPA exam sections use tax exempt?
Tax exempt appears in the REG section of the CPA exam.
Related terms
- gross income: All income from whatever source derived, unless the Code specifically excludes it.
- private foundation: A tax-exempt organization funded from one source rather than from the public.
- small business corporation: The eligibility test for an S election: a domestic corporation, not an ineligible corporation, with no more than 100 shareholders, no shareholder other than an individual, estate, qualifying trust, or qualifying exempt organization, no nonresident alien shareholder, and one class of stock.