CAP Charitable Giving Strategies

Question 1

What is the primary benefit of donating appreciated securities to a charity?

Accepted Answer

It allows donors to avoid capital gains tax and receive a deduction

Answer

It requires the donor to pay capital gains tax

Answer

It is only beneficial for small donations

Answer

It reduces the value of the gift

Question 2

Which charitable giving vehicle provides donors with lifetime income while supporting a charity?

Accepted Answer

Charitable remainder trust (CRT)

Answer

Donor-advised fund (DAF)

Answer

Charitable lead trust (CLT)

Answer

Private foundation

Question 3

What is the main advantage of using a donor-advised fund (DAF)?

Accepted Answer

It provides an immediate tax deduction and flexible donations

Answer

It limits the number of charities a donor can support

Answer

It requires annual distributions to a single charity

Answer

It has no tax benefits

Question 4

Which type of charitable trust provides income to a charity for a set term before assets pass to beneficiaries?

Accepted Answer

Charitable lead trust (CLT)

Answer

Charitable remainder trust (CRT)

Answer

Donor-advised fund (DAF)

Answer

Endowment fund

Question 5

How can a private foundation benefit high-net-worth donors?

Accepted Answer

It allows donors to control investments and giving strategies

Answer

It limits the flexibility of donations

Answer

It requires immediate full distribution of funds

Answer

It offers no tax benefits

Question 6

What is a key tax advantage of making a qualified charitable distribution (QCD) from an IRA?

Accepted Answer

It reduces taxable income and satisfies RMDs

Answer

It increases taxable income

Answer

It has no tax impact

Answer

It eliminates the need for a tax return