CAP Charitable Giving Strategies 2

Question 1

Which charitable giving vehicle allows a donor to make a large gift in one year, receive an immediate deduction, and distribute grants to charities over time?

Accepted Answer

Donor-advised fund

Answer

A donor-advised fund (DAF) allows donors to make an irrevocable contribution, take an immediate tax deduction, and then recommend grants to qualified charities at any future time.

Question 2

A charitable remainder annuity trust (CRAT) differs from a charitable remainder unitrust (CRUT) primarily in that a CRAT:

Accepted Answer

Pays a fixed dollar amount determined at inception

Answer

A CRAT pays a fixed annuity amount set at the trust's creation, whereas a CRUT pays a fixed percentage of assets revalued annually.

Question 3

Under the CAP curriculum, which factor most directly determines the philanthropic capacity of a client?

Accepted Answer

The client's wealth, income, and existing charitable commitments relative to lifestyle needs

Answer

Philanthropic capacity is assessed by evaluating total wealth, current income, existing obligations, and lifestyle needs to determine how much a client can sustainably give.

Question 4

Which of the following best describes the concept of bunching charitable contributions?

Accepted Answer

Concentrating two or more years of planned donations into one tax year to exceed the standard deduction threshold

Answer

Bunching accelerates multiple years of planned giving into a single year so the total itemized deductions exceed the standard deduction, maximizing the tax benefit.

Question 5

A donor contributes $500,000 of long-term appreciated stock to a public charity. Assuming AGI is $600,000, what is the maximum deductible amount in the contribution year?

Accepted Answer

$180,000 (30% of AGI)

Answer

Contributions of long-term capital gain property to public charities are deductible at fair market value but limited to 30% of AGI, yielding a $180,000 deduction.

(CAP) Certified Philanthropic Advisor Practice Test

(CAP) Certified Philanthropic Advisor Practice Test

CAP Charitable Giving Strategies 2