CFP

By Investopedia AAA

Charitable Transfers - Sample Questions 1 - 5

1. Which of the following are true statements concerning private foundations?

(1) The donor deduction is usually a 50% limit on their adjusted gross income.
(2) The donor deduction is usually a 30% limit on their adjusted gross income.
(3) Most contributions are from a single contributor.
(4) The foundation must do its own record keeping and due diligence.
(5) Private foundations must file a Form 990-PF annually.

A) 1, 3 and 5 only
B)
2, 3 and 4 only
C)
2, 3 and 5 only
D) 2, 3, 4 and 5 only

2. Which of the following is an advantage of a Charitable Annuity?

A) Annuity payouts are higher than commercial annuities.
B)
The donor receives annuity payments for their lifetime.
C)
Annuity payments are tax-free.
D) The donor receives a full deduction for property transferred to the charitable annuity.

3. Kevin, a recent retiree, would like to make a significant donation to the Humane Society in his hometown to save animals. He could really use the charitable deduction for his tax return, but he also needs to have exactly $800 per month in income for the next 10 years to cover his fixed mortgage payment. He's afraid that if he gives the lump sum to the charity, he won't have these funds available to pay his mortgage for the next 10 years. Which is the best option for Kevin to consider?

A) CLUT
B)
CRUT
C)
CRAT
D) Pooled Income Fund

4. Mr. and Mrs. Ford would like to do some annual charitable gifting, but they are unsure which program is the best to meet their needs. They come to you for advice, since they do not need the income from these gifts. They would like for their gifts to remain anonymous and they want very little to do with the record keeping or daily operations. Their plan is to contribute a variable amount over the next 15 to 20 years and get their children involved after that to continue the charitable family name. What would you recommend?

A) Donor Advised Funds
B)
Pooled Income Funds
C)
Private Foundation
D)
CRAT

5.
Norma would like to gift $100,000 to each of her two grandchildren within the next 12 years, around the time they would be starting college. She has strong ties to her church and has been gifting the church the income ($10,000) generated from the $200,000 each year. She would like to continue to gift the $10,000 to the church annually. What would be a good option for Norma?

A) Charitable remainder trust
B)
Charitable gift annuity
C)
Donor advised fund
D) Charitable lead trust


Answer Key

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