CAP Regulatory Compliance & Law 5

Question 1

A donor contributes a conservation easement on farmland to a land trust. Which IRC section governs the deductibility of this contribution?

Accepted Answer

IRC Section 170(h)

Answer

IRC Section 170(h) governs the deductibility of qualified conservation contributions, including easements, requiring the donation to be made to a qualified organization exclusively for conservation purposes.

Question 2

Which of the following activities by a 501(c)(3) organization constitutes prohibited political campaign intervention under IRS rules?

Accepted Answer

Endorsing a specific candidate for public office

Answer

Endorsing a specific candidate for public office is absolutely prohibited for 501(c)(3) organizations under the political campaign intervention rules, which can result in loss of exemption.

Question 3

What is the 'minimum distribution requirement' (MDR) for private foundations under IRC Section 4942?

Accepted Answer

5% of the foundation's net assets must be distributed annually for charitable purposes

Answer

IRC Section 4942 requires private foundations to distribute at least 5% of the fair market value of their investment assets annually for charitable purposes or face an excise tax.

Question 4

An advisor recommends that a client use a pooled income fund (PIF) for a charitable gift. Which of the following correctly describes a PIF?

Accepted Answer

A trust in which donors' gifts are commingled and donors receive a pro-rata share of actual income earned

Answer

A pooled income fund combines gifts from multiple donors into a single fund, with each donor receiving a proportionate share of the actual net income earned during their lifetime, after which the gift passes to charity.

Question 5

Under state charitable solicitation registration laws, when must a nonprofit organization generally register before conducting fundraising activities?

Accepted Answer

Prior to soliciting contributions in each state where registration is required

Answer

Most states require charitable organizations to register before soliciting contributions within that state, regardless of the organization's incorporation state, though exemption thresholds vary.

(CAP) Certified Philanthropic Advisor Practice Test

(CAP) Certified Philanthropic Advisor Practice Test

CAP Regulatory Compliance & Law 5