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
A donor contributes a remainder interest in their personal residence to charity while retaining the right to live there for life. This arrangement is called:
Answer: A Retained Life Estate gift
A Retained Life Estate allows a donor to contribute a remainder interest in a personal residence or farm to charity while retaining the right to use the property for life, generating a current income tax deduction.
Under the excess business holdings rules of IRC Section 4943, a private foundation and its disqualified persons together may not own more than what percentage of a for-profit business?
Answer: 20%
IRC Section 4943 limits combined holdings of a private foundation and its disqualified persons in any business enterprise to 20% (35% if a third party has effective control).
Which of the following gifts to a Donor-Advised Fund does NOT qualify as a deductible contribution?
Answer: A pledge to make a future cash contribution
A pledge to make a future contribution is not deductible until the cash or property is actually transferred to the DAF; pledges do not constitute completed gifts.
The Section 7520 rate used to value split-interest charitable gifts is equal to:
Answer: 120% of the federal midterm rate, rounded to the nearest 0.2%
The Section 7520 rate is 120% of the applicable federal midterm rate, rounded to the nearest two-tenths of one percent, and is published monthly by the IRS.
A donor makes a conservation easement donation. To qualify for a charitable deduction under IRC Section 170(h), the easement must be granted to:
Answer: A qualified organization (governmental unit or publicly supported organization) in perpetuity
A qualified conservation contribution must be made to a qualified organization—a governmental unit or publicly supported charity—and must be granted in perpetuity to protect specific conservation values.
Which of the following best describes 'bunching' as a charitable giving strategy in the context of the current standard deduction?
Answer: Accelerating multiple years of charitable contributions into one tax year to exceed the standard deduction threshold
Bunching involves concentrating several years' worth of charitable contributions into a single tax year so that total itemized deductions exceed the standard deduction, maximizing the tax benefit.
A testamentary charitable bequest qualifies for what type of tax deduction in the donor's estate?
Answer: An unlimited estate tax charitable deduction under IRC Section 2055
Under IRC Section 2055, charitable bequests qualify for an unlimited estate tax deduction with no percentage limitation, effectively removing the donated amount from the taxable estate.