Reference no: EM131632566

1. A charitable corporation buys a new piece of land with plans to start building a hospital in two years. On the next property tax assessment date the land is still vacant and construction has not begun. In most states, what is the most likely result of the charity's petition for exemption from real estate taxes?

a. Because the charity owns the land, the property is exempt.

b. Because the land is not being used, the property is not exempt.

c. If building permits have been issued, the property is exempt.

d. If the charity is a church, the property is exempt.

2. A tax-exempt hospital has a pharmacy that fills prescriptions for its patients and sells other products typically found in commercial pharmacies. Which of the following is the best summary of the tax implications of this situation?

a. The hospital is competing with taxable businesses, therefore the hospital is likely to lose its tax exemption.

b. The hospital is subject to prosecution under the unfair competition laws.

c. The hospital will need to pay tax on some of the pharmacy's profits.

d. The hospital's governing board members have committed an ultra vires act by allowing non-charitable use of the property.