AEP Charitable Planning & Philanthropy 2

Question 1

Which of the following best describes a 'flip CRUT'?

Accepted Answer

A net income CRUT that flips to a standard CRUT upon a triggering event such as asset sale

Answer

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.

Question 2

Under the self-dealing rules of IRC Section 4941, which transaction between a private foundation and a disqualified person is PROHIBITED?

Accepted Answer

A disqualified person selling property to the foundation at fair market value

Answer

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.

Question 3

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?

Accepted Answer

5%

Answer

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.

Question 4

A Charitable Gift Annuity (CGA) differs from a Charitable Remainder Annuity Trust (CRAT) primarily because:

Accepted Answer

A CGA is a direct contract between the donor and the charity, not a separate trust

Answer

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.

Question 5

When a donor contributes appreciated long-term capital gain property to a public charity, the AGI deduction limit is:

Accepted Answer

30% of AGI

Answer

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.

(AEP) Accredited Estate Planner Practice Test

(AEP) Accredited Estate Planner Practice Test

AEP Charitable Planning & Philanthropy 2