GS 849

Question 1

For an undivided partial interest of real estate, what happens if the donor is not in the process of transferring the gift completely within 10 years?

Answer 1

The deduction is recaptured as taxable ordinary income to the donor with a 10% penalty tax.

Question 2

Statements of value from the IRS are available for works of art appraised at how much and more?

Answer 2

$50,000

Question 3

For a noncash gift, what amount and greater does a donor file IRS Form 8283?

Answer 3

$500

Question 4

For gifts of non-publically traded securities, for what amount and for what greater is an appraisal needed?

Answer 4

$10,000

Question 5

For noncash gifts other than art or non-publically at what amount or greater is an appraisal needed?

Answer 5

$,5000

Question 6

For gifts of art, for what amount and greater is an appraisal needed?

Answer 6

$20,000

Question 7

For noncash gifts at what amount or greater does the nonprofit sign the 8283?

Answer 7

$5,000

Question 8

Donee organizations must file what form if they sell, exchange, consume, or dispose of charitable deduction property within three years after receiving it?

Answer 8

Form 8282

Question 9

A qualiified appraisal must be made not more than
how many days before the date of the contribution.

Answer 9

60

Question 10

What are examples of Adjustments to gross income (“Above the Line Deductions”) that results in adjusted gross income?

Answer 10

Contributions to traditional and Roth individual retirement arrangements (IRAs); alimony; student loan interest; business expenses, etc.

Question 11

What are examples of Ordinary income property deductible at basis?

Answer 11

• Inventory held for sale in a business
• Life insurance
• Deferred annuities
• Short-term capital gain property
• Property created by donor

Question 12

What is the AGI limitation for a donation of ordinary income property?

Answer 12

50%

Question 13

What is the deduction for a donation of ordinary income property either to public or private charity?

Answer 13

Lesser of FMV or cost basis

Question 14

For a gift of long-term capital gain property to a private charity, the deduction is limited to what unless gift is of qualified appreciated stock (i.e., publicly traded)?

Answer 14

Cost basis

Question 15

Tangible property unrelated to the recipient organization’s tax-exempt purpose is deductible up to what % of AGI when given to a public charity?

Answer 15

50%

Question 16

When the property given for use by the charity in its
exempt purpose is sold by the charity within 3 years, what is recaptured by the taxpayer?

Answer 16

The difference between the deduction for FMV and for basis

Question 17

An election is available whereby a donor can reduce the amount of the deduction for long-term capital gain property to basis. If the election is taken, the deduction limit is what percent of AGI?
The election must apply to all such property gifted in a tax year.

Answer 17

50%

Question 18

T or F: Estate tax charitable deductions are not subject to percentage limitations?

Answer 18

True

Question 19

According to Giving USA 2020, how much does total giving go to bequest?

Answer 19

10%

Question 20

T or F? Ordinary income property, such as the gain in a deferred annuity or the value of an IRA or other qualified plan interest has stepped-up basis after someone dies

Answer 20

False

Question 21

T or F? If the gift is left to the executor’s discretion or occurs by operation of the state intestacy laws, the deduction is not available.

Answer 21

True

Question 22

A CRUT can pay out to a maximum of what?

Answer 22

50%

Question 23

CRATs shift the investment risk where?

Answer 23

To the remainder beneficiary

Question 24

What is Rescission?

Answer 24

Undoing a CRT through court action

Question 25

Why is the payout higher for Commercial Single Premium Income Annuities (SPIA)?

Answer 25

Because there is no charitable element

Question 26

For a CLAT, payment to charity can be specified by a term of years or based on what?

Answer 26

A life or lives in being at the inception of the CLT.

Question 27

T or F. CLAT charitable beneficiaries can include supporting organizations, Donor-advised funds, and Private foundations.

Answer 27

True

Question 28

Gift of Debt-encumbered Property. The loan results in what for the donor?

Answer 28

Income

Question 29

T or F. A Grantor CLT is an entity that pays its own income tax.

Answer 29

False

Question 30

What are the factors in calcuating the remainder interest of a retained life estate?

Answer 30

* Age of donor(s) or term of the agreement * Value of the building, its useful life, and its salvage value * Value of the land * 7520 rate (used as discount rate)

Question 31

What is the charitable deduction of a retained life estate?

Answer 31

FMV - present value of retained life estate

Question 32

T or F? The transfer of a retained life estate is made through a trust.

Answer 32

False. It's made through a deed.

Question 33

What is that carry forward for a qualified conservation easement?

Answer 33

15 years?

Question 34

What is the AGI for a qualified conservation easement

Answer 34

50% or 100% for qualified farmers

Question 35

T or F. There is a tax benefit for a charitable LLC

Answer 35

false

Question 37

T or F. A Grantor CLT is allowed an income tax deduction for payments made to charity.

Answer 37

False

Question 38

T or F. The grantor of a Grantor CLT reports and pays taxes on trust distributed to charity,

Answer 38

True

Question 39

T or F. A qualified CLT (that is, a CLT qualified to count as a CLT for tax purposes) is not irrevocable.

Answer 39

False

Question 40

For a paid-up life insurance policy, the deduction is equal to what?

Answer 40

to the lesser of the replacement cost or adjusted basis.

Question 41

What is a terminal reserve for a whole life insurance policy?

Answer 41

This is the amount of money the insurance company sets aside to pay the death claim. For whole life policies, it grows predictably each year based on guaranteed premiums and cash values

Question 42

Generally, how is basis in a life insurance policy computed?

Answer 42

Essentially, basis is what the client paid minus what client has already received in cash by way of dividends, if any.

Question 43

What is the deduction amount for a bargain sale?

Answer 43

The deductible amount is what the charity gets minus what the donor receives

Question 44

T or F. With respect to giving appreciated S corp stock to a DAF The tax paid by the DAF can be minimized if the DAF sponsor is set up as a trust rather than as a corporation.

Answer 44

True The correct answer is C. Both are true. There is an old saying, "Make a law, make a business." There are now providers of DAFs who specifically target gifts of S Corporation stock. If such stock is given to a charity that is established as a corporation, the "shrinkage" due to tax paid by the charity upon sale can be 35% of the value of the stock. Likewise, any flow-through income is taxed at a high corporate rate. But if a DAF is under a charity that has been established as a trust, then the rates paid are much lower. Also, the DAF gets a deduction for payments made to charities. The point to remember for practical work with clients is that a direct gift to charity or to a DAF established under a corporate form can result in shrinkage up to 35% of the gain upon sale. Using a DAF set up under a trust can reduce that tax. And, using a DAF can be more efficient than a direct gift of the stock to charity because the DAF can get an offsetting deduction for gifts it makes to the charity. While all this may seem "technical," the points are worth reflecting upon by both nonprofit gift planners and advisors. If the charity is willing to "detour" the gift via a DAF, then the dollars received by the charity may be greater. The "detour" via the DAF also lets the charity outsource the hard work and the liability of accepting difficult-to-value assets like S Corporation stock. The charity also avoids the hassle and expense of calculating the taxes due. And the charity can avoid the slow-motion process of convening the gift acceptance committee and making a decision. Often, donors contemplating a sale of a closely held business do not have a lot of time as the deal comes together. A DAF company that specializes in such transactions may be able to move faster. From an advisor's point of view, it is easier to get paid on assets under management via a DAF than in a direct gift to charity. Will this emerge, then, as a focus for collaboration among CAPs? The case studies from Bryan Clontz are meant to highlight this potential opportunity.

Question 45

What is the deduction of a paid-up life insurance policy to charity?

Answer 45

A paid-up policy is valued for charitable gift purposes at replacement value, but the gift value is limited to basis, if basis is less than replacement cost. Also, be

Question 46

T or F. QCDs can go into DAFs

Answer 46

False

Question 47

T or F. DAFs can accept patents

Answer 47

True

Question 48

What is a designated fund at a community foundation?

Answer 48

An endowment to hold assets permanently for a named charity

Question 49

What are the four community foundation operating models

Answer 49

donor focused, grant focused, fiscal agent, and leadership.

Question 50

What is the initial penalty for self dealing with a private foundation and what can it rise to?

Answer 50

10% initially based on the amount involved and can rise to 200%

Question 51

Excess business holdings for a private foundation are triggered if a private foundation owns more than what percentage of voting stock of a business?

Answer 51

20%

Question 52

What is the five-year rule for private foundations and SOs?

Answer 52

If the PF or SO receives closely held stock by gift or bequest, tax is not imposed until 5 years (10 years with an IRS extension) after receipt.

Question 53

If a private foundation makes a taxable expenditure, it must do what?

Answer 53

Pay an excise tax

Question 54

T or F. Private foundation program related investments can be made to noncharitable, non-exempt entities and do count toward the 5% payout requirement

Answer 54

True

Question 55

T or F. A private foundation's mission-related investments are a charitable activity

Answer 55

False.

Question 56

T or F. Governance of a supporting organization is carried out by family members.

Answer 56

False. Governance is conducted by nonfamily members,

Question 57

T or F. A donor can name a supporting organization.

Answer 57

True

Question 58

T or F. Income tax and estate tax deductions are both allowed for gifts to the U.S., a state, or a political subdivision, if used for a public purpose.

Answer 58

True