CAP Regulatory Compliance & Law 4

Question 1

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

Accepted Answer

A grant to an individual for travel without proper procedures

Answer

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

Question 2

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

Accepted Answer

Conflict of interest

Answer

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.

Question 3

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

Accepted Answer

60% of AGI

Answer

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

Question 4

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?

Accepted Answer

Spouse, ancestors, lineal descendants, and their spouses

Answer

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

Question 5

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

Accepted Answer

Form 990 (full)

Answer

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.

(CAP) Certified Philanthropic Advisor Practice Test

(CAP) Certified Philanthropic Advisor Practice Test

CAP Regulatory Compliance & Law 4