Practice Test Geeks(CEA) Certified Estate Advisor Practice Test
← All CEA Flashcard Decks

Charitable Giving Strategies Flashcards

7 cards from real CEA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Charitable Giving Strategies flashcards as text

  1. A donor transfers appreciated stock worth $50,000 (basis $10,000) to a Charitable Remainder Unitrust (CRUT). What is the primary tax advantage of this approach versus selling the stock first?

    Answer: The donor avoids immediate capital gains tax on the full $40,000 appreciation

    Contributing appreciated stock to a CRUT allows the trust to sell the stock and reinvest the full proceeds without the donor recognizing capital gains at the time of contribution.

  2. Which charitable giving vehicle allows a donor to make an irrevocable gift, receive an immediate income tax deduction, recommend grants over time, and avoid managing a private foundation?

    Answer: Donor-Advised Fund

    A Donor-Advised Fund provides an immediate deduction upon contribution while allowing the donor to recommend grants to charities over time without the administrative burden of a private foundation.

  3. Under IRC Section 170, what is the AGI limitation for cash contributions to a public charity?

    Answer: 60%

    Cash contributions to public charities are deductible up to 60% of the donor's adjusted gross income, with a 5-year carryforward for excess amounts.

  4. A Charitable Lead Annuity Trust (CLAT) pays a fixed annuity to charity for a term of years, after which the remainder passes to whom?

    Answer: The donor's heirs or other non-charitable beneficiaries

    In a CLAT, charity receives the income stream during the trust term, and the remainder ultimately passes to the donor's heirs or other non-charitable remainder beneficiaries.

  5. What is the annual exclusion for QCD (Qualified Charitable Distribution) from an IRA for taxpayers age 70½ or older in 2024?

    Answer: $100,000

    Taxpayers age 70½ or older may make QCDs of up to $100,000 per year directly from their IRA to qualified charities, satisfying RMD requirements without including the distribution in gross income.

  6. A private foundation is subject to an excise tax on net investment income under IRC Section 4940. What is the current rate of this tax?

    Answer: 1.39%

    The Tax Cuts and Jobs Act of 2017 replaced the variable 1%/2% rate with a flat 1.39% excise tax on net investment income of private foundations.

  7. Which strategy allows a donor to contribute to charity via a bequest that is fully revocable during the donor's lifetime and does not qualify for a current income tax deduction?

    Answer: Charitable bequest in a will

    A charitable bequest in a will is revocable during the donor's lifetime, qualifies for an estate tax deduction, but provides no current income tax deduction.