The maximum specific deduction available on Form 990-T for unrelated business income is $1,000 per trade or business activity, as governed by Section 512(b)(12) of the Internal Revenue Code.
The correct answer is (a) $1,000.
The maximum specific deduction available on Form 990-T, Exempt Organization Business Income Tax Return, for unrelated business income is governed by Section 512(b)(12) of the Internal Revenue Code. As of my knowledge cutoff in January 2022, the specific deduction allows a tax-exempt organization to offset up to $1,000 of its unrelated business income.
Therefore, option (a) $1,000 is the correct answer.
It's important to note that this deduction is applied separately to each trade or business generating unrelated business income. If an organization has multiple unrelated business activities, the deduction can be applied to each one individually, up to the maximum allowed for each.
This provision aims to provide a degree of relief for tax-exempt organizations engaged in relatively small-scale unrelated business activities, recognizing that these entities may have limited capacity to engage in large-scale commercial ventures without jeopardizing their tax-exempt status.
In conclusion, the maximum specific deduction available on Form 990-T for unrelated business income is $1,000 per trade or business activity.