CAP Regulatory Compliance & Law 2

Question 1

Under IRC Section 4941, which of the following is classified as a 'self-dealing' transaction between a private foundation and a disqualified person?

Accepted Answer

Sale of property by the foundation to a disqualified person

Answer

IRC Section 4941 prohibits self-dealing transactions including sales of property between a private foundation and a disqualified person, regardless of whether the transaction is at fair market value.

Question 2

A donor establishes a charitable remainder unitrust (CRUT). Which IRS form must the trustee file annually to report the trust's activities?

Accepted Answer

Form 5227

Answer

Form 5227 (Split-Interest Trust Information Return) must be filed annually by trustees of charitable remainder trusts, charitable lead trusts, and pooled income funds.

Question 3

Which type of organization is subject to the excise tax on net investment income under IRC Section 4940?

Accepted Answer

Private foundations

Answer

IRC Section 4940 imposes a 1.39% excise tax on the net investment income of private foundations, not on public charities or other exempt organizations.

Question 4

A private foundation makes a grant to an organization that is NOT a public charity. Under IRS rules, the foundation must exercise what level of oversight?

Accepted Answer

Expenditure responsibility

Answer

When a private foundation grants to a non-public charity (including foreign organizations), it must exercise expenditure responsibility, ensuring funds are used for the charitable purpose specified.

Question 5

Under the Pension Protection Act of 2006, what is required for a donor to claim a deduction for a cash charitable contribution of any amount?

Accepted Answer

A bank record or written communication from the charity showing the date and amount

Answer

The Pension Protection Act of 2006 requires that cash donations of any amount be substantiated by a bank record or written communication from the charity showing the date and amount.

(CAP) Certified Philanthropic Advisor Practice Test

(CAP) Certified Philanthropic Advisor Practice Test

CAP Regulatory Compliance & Law 2