Charitable Planning & Philanthropy Flashcards
7 cards from real AEP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Charitable Planning & Philanthropy flashcards as text
Which of the following best describes a 'flip CRUT'?
Answer: A net income CRUT that flips to a standard CRUT upon a triggering event such as asset sale
A flip CRUT begins as a net income CRUT (NICRUT) and converts to a standard CRUT upon a defined triggering event (e.g., sale of illiquid assets), at which point it pays the fixed unitrust percentage.
Under the self-dealing rules of IRC Section 4941, which transaction between a private foundation and a disqualified person is PROHIBITED?
Answer: A disqualified person selling property to the foundation at fair market value
IRC §4941 prohibits virtually all sales or exchanges of property between a private foundation and a disqualified person, even at fair market value, because the rule is absolute rather than based on fairness.
A private foundation must distribute at least what percentage of its net investment assets annually to avoid the excise tax on failure to distribute income under IRC Section 4942?
Answer: 5%
Private foundations must make qualifying distributions of at least 5% of their net investment assets annually to avoid the excise tax imposed under IRC §4942.
A Charitable Gift Annuity (CGA) differs from a Charitable Remainder Annuity Trust (CRAT) primarily because:
Answer: A CGA is a direct contract between the donor and the charity, not a separate trust
A CGA is a simple bilateral contract between the donor and the charity where the charity promises annuity payments from its general assets; it does not create a separate trust entity like a CRAT.
When a donor contributes appreciated long-term capital gain property to a public charity, the AGI deduction limit is:
Answer: 30% of AGI
Contributions of long-term capital gain property (such as appreciated stock) to public charities are limited to 30% of AGI, with a five-year carryforward for any excess.
Which estate planning tool allows a donor to make a large irrevocable gift to a pooled fund managed by a charity while retaining the right to income for life, with the remainder passing to the charity?
Answer: Pooled Income Fund
A Pooled Income Fund (PIF) pools contributions from multiple donors, each retaining a pro-rata income interest based on investment earnings, with the remainder passing to the sponsoring charity at the donor's death.
A supporting organization under IRC Section 509(a)(3) differs from a private foundation because it:
Answer: Is treated as a public charity due to its close operational relationship with supported public charities
A §509(a)(3) supporting organization qualifies as a public charity (not a private foundation) because it maintains a specified relationship with one or more publicly supported charities, avoiding most private foundation excise taxes.