CES Charitable Planning & Philanthropy 2

Question 1

Which charitable arrangement involves a donor transferring assets directly to a charity in exchange for fixed annuity payments for the donor's lifetime?

Accepted Answer

Charitable Gift Annuity

Answer

Charitable Remainder Unitrust

Answer

Pooled Income Fund

Answer

Donor Advised Fund

Question 2

In a Pooled Income Fund, contributions from multiple donors are:

Accepted Answer

Commingled in a fund managed by the charity, with each donor receiving a pro-rata share of income

Answer

Held in separate sub-trusts for each donor

Answer

Used to purchase individual annuity contracts from insurance companies

Answer

Placed into a Donor Advised Fund for future grant recommendations

Question 3

The key advantage of a Net Income with Makeup Charitable Remainder Unitrust (NIMCRUT) for donors contributing illiquid assets is:

Accepted Answer

The trust can accumulate income in low-income years and distribute accumulated amounts in later high-income years

Answer

It guarantees a fixed payment regardless of trust income or asset performance

Answer

It eliminates estate taxes on all assets transferred to the trust

Answer

It provides an immediate income tax deduction equal to the full fair market value of contributed assets

Question 4

A 'bargain sale' to a charity occurs when:

Accepted Answer

A donor sells property to a charity for less than its fair market value

Answer

A donor contributes mortgaged property to a charity

Answer

A donor sells appreciated stock to a charity at a gain

Answer

A donor contributes cash that exceeds the AGI deduction limit for the year

Question 5

When a donor receives a tangible benefit (quid pro quo) in exchange for a charitable contribution, the deductible amount is:

Accepted Answer

The total contribution amount minus the fair market value of the benefit received

Answer

Zero, because any benefit received disqualifies the entire deduction

Answer

The full contribution amount, with the benefit reported as income

Answer

The contribution amount minus the cost basis of the benefit received

Question 6

For non-cash charitable contributions valued over $5,000 (other than publicly traded securities), donors must generally obtain:

Accepted Answer

A qualified appraisal from a qualified appraiser

Answer

An IRS pre-approval letter confirming the valuation

Answer

Written acknowledgment from the charity alone

Answer

Notarized documentation from the donor's legal counsel

Question 7

A 'Flip CRUT' is best characterized as a trust that:

Accepted Answer

Begins as a net income unitrust and converts to a standard unitrust upon a triggering event such as a property sale

Answer

Converts from a fixed annuity trust to a unitrust format upon a triggering event

Answer

Redirects the remainder interest from charity to family members after a specified period

Answer

Converts non-income-producing trust assets to income-producing assets on an annual basis