Regulatory Compliance & Law Flashcards

Under IRC Section 4945, a taxable expenditure by a private foundation includes which of the following?

Answer: A grant to an individual for travel without proper procedures

Individual grants by private foundations without following IRS-prescribed procedures (competitive process, tracking, and reporting) constitute taxable expenditures under IRC Section 4945.

A nonprofit's board member votes on a contract that benefits their own business. Which legal concept most directly governs this situation?

Answer: Conflict of interest

A board member voting on a transaction that benefits their own business presents a conflict of interest, which must be disclosed and managed according to the organization's conflict of interest policy.

What is the AGI deduction limit for a cash gift to a public charity by an individual donor under the standard charitable deduction rules?

Answer: 60% of AGI

Under current law (post-TCJA), cash contributions to public charities by individuals are deductible up to 60% of adjusted gross income.

A private foundation's board member is classified as a 'disqualified person.' Which family member of that board member is also automatically a disqualified person?

Answer: Spouse, ancestors, lineal descendants, and their spouses

Under IRC Section 4946, a disqualified person's family members include their spouse, ancestors, lineal descendants (children, grandchildren), and the spouses of lineal descendants.

Which filing requirement applies to a tax-exempt organization with gross receipts normally exceeding $200,000 or total assets exceeding $500,000?

Answer: Form 990 (full)

Organizations with gross receipts normally exceeding $200,000 or total assets exceeding $500,000 must file the full Form 990, not the simplified Form 990-EZ or e-postcard.

A charitable gift annuity (CGA) is best described as which type of legal arrangement?

Answer: A contract between the donor and the charity, not a trust

A charitable gift annuity is a contract (not a trust) between the donor and the charity, under which the charity promises to pay a fixed annuity to the annuitant for life in exchange for an irrevocable gift.

Under the Uniform Prudent Management of Institutional Funds Act (UPMIFA), what standard governs a charity's spending from an endowment fund?

Answer: Prudent spending considering the purposes, duration, and general economic conditions

UPMIFA replaced rigid spending rules with a prudent spending standard, requiring institutions to consider factors like fund purpose, duration, economic conditions, and the organization's needs.