CAP Documentation & Reporting 2 — Questions and Answers
Question 1: Which IRS form must a donor obtain from a charity to deduct a cash contribution of $250 or more?
- Form 8283
- Written contemporaneous acknowledgment letter (Correct answer)
- Form 990
- Schedule A attachment
Correct answer: Written contemporaneous acknowledgment letter
For cash gifts of $250 or more, donors must obtain a written contemporaneous acknowledgment from the charity stating the amount and whether any goods or services were provided in exchange.
Question 2: A donor contributes a painting valued at $15,000 to a museum. Which additional form must the donor file with their tax return?
- Form 709
- Form 8283 Section B (Correct answer)
- Form 1041
- Form 5227
Correct answer: Form 8283 Section B
Non-cash contributions over $5,000 (other than publicly traded securities) require a qualified appraisal and IRS Form 8283 Section B, signed by an appraiser.
Question 3: What is the maximum number of years a private foundation must retain records related to grants and expenditures?
- 3 years
- 5 years
- 7 years (Correct answer)
- 10 years
Correct answer: 7 years
Private foundations generally must retain records for at least 7 years after the period to which they relate, consistent with IRS audit statutes.
Question 4: A charity receives a $500 donation and gives the donor a $50 dinner in return. What amount must the acknowledgment letter state as the deductible portion?
- $500
- $450 (Correct answer)
- $50
- The full $500 with no reduction needed
Correct answer: $450
The acknowledgment must disclose the fair market value of goods or services received; the deductible quid pro quo amount is $500 minus the $50 FMV of the dinner, equaling $450.
Question 5: Which document must accompany IRS Form 8283 Section B for a non-cash gift exceeding $5,000?
- A bank statement
- A qualified appraisal prepared by a qualified appraiser (Correct answer)
- A letter from the charity's board
- A copy of the donor's prior year return
Correct answer: A qualified appraisal prepared by a qualified appraiser
A qualified appraisal conducted by a qualified appraiser no earlier than 60 days before the donation and no later than the tax return due date must accompany Form 8283 Section B.
Question 6: Under IRS rules, a contemporaneous written acknowledgment for a charitable gift must be received by the donor by:
- December 31 of the tax year of the gift
- The earlier of the date the return is filed or the return due date including extensions (Correct answer)
- Within 30 days of the donation
- Within 60 days of the donation
Correct answer: The earlier of the date the return is filed or the return due date including extensions
The acknowledgment must be obtained by the donor by the earlier of the date the tax return is filed or the due date (including extensions) of the return for the year of the contribution.
Question 7: A donor-advised fund sponsor must provide donors with written acknowledgment that the DAF has:
- Exclusive legal control over the contributed assets (Correct answer)
- Promised to distribute funds within five years
- Matched the contribution dollar-for-dollar
- Registered the gift with the state attorney general
Correct answer: Exclusive legal control over the contributed assets
DAF sponsors must acknowledge that the sponsoring organization has exclusive legal control over contributed assets, which is a key characteristic distinguishing DAFs from private foundations.
CAP Documentation & Reporting 2
Which IRS form must a donor obtain from a charity to deduct a cash contribution of $250 or more?