CEA Charitable Giving Strategies 4

Question 1

A Pooled Income Fund differs from a Charitable Gift Annuity in that the Pooled Income Fund:

Accepted Answer

Pays a variable income based on the fund's actual investment return

Answer

A Pooled Income Fund pays donors a proportionate share of the fund's actual annual investment income, making payments variable, unlike a CGA which pays a fixed annuity.

Question 2

The 'Ten Percent Test' for Charitable Remainder Trusts requires that:

Accepted Answer

The present value of the charitable remainder interest must be at least 10% of the initial contribution

Answer

IRC Section 664 requires that the present value of the remainder interest passing to charity must be at least 10% of the initial net fair market value of assets transferred to the trust.

Question 3

Which of the following is a self-dealing transaction prohibited under IRC Section 4941 for private foundations?

Accepted Answer

Making a loan to a foundation manager even at market interest rates

Answer

Under IRC Section 4941, loans between a private foundation and a disqualified person constitute self-dealing regardless of whether the terms are at market rates.

Question 4

A Charitable Lead Trust (CLT) is most useful for estate planning when:

Accepted Answer

Interest rates are low and assets are expected to appreciate significantly

Answer

CLTs are most effective when the Section 7520 rate is low (reducing the calculated value of the charity's annuity) and assets are expected to appreciate, maximizing the remainder passing to heirs.

Question 5

What IRS form must a donor obtain from a charity for a single cash contribution of $250 or more to support the deduction?

Accepted Answer

A contemporaneous written acknowledgment from the charity

Answer

For contributions of $250 or more, donors must obtain a contemporaneous written acknowledgment from the charity before filing their tax return, or the deduction is disallowed.

(CEA) Certified Estate Advisor Practice Test

(CEA) Certified Estate Advisor Practice Test

CEA Charitable Giving Strategies 4