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Charitable Organizations Flashcards

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  1. What is the maximum charitable contribution deduction for cash donations to a public charity as a percentage of the donor's adjusted gross income (AGI)?

    Answer: 60%

    Under current law, cash contributions to public charities are deductible up to 60% of the donor's AGI, with any excess carried forward up to five years.

  2. Which of the following is NOT a qualifying distribution for purposes of a private foundation's 5% minimum distribution requirement?

    Answer: Investment in for-profit securities to earn income for the foundation

    Investments in for-profit securities for income purposes are not qualifying distributions; qualifying distributions must be made directly for exempt purposes.

  3. An organization applies for 501(c)(3) status but the IRS issues a proposed adverse determination. What is the organization's first option for appeal?

    Answer: Request a conference with the IRS Office of Appeals

    Upon receiving a proposed adverse determination, an organization may first request a conference with the IRS Appeals Office to contest the finding.

  4. A donor contributes a vehicle worth $4,500 to a charity that sells it immediately for $3,200. What amount may the donor deduct?

    Answer: $3,200

    When a charity sells a donated vehicle without significant intervening use, the donor's deduction is limited to the gross proceeds from the sale ($3,200), not the claimed FMV.

  5. Which type of organization can receive tax-deductible contributions but is NOT classified as a 501(c)(3) organization?

    Answer: A veterans' organization described in IRC Section 170(c)(3)

    Certain veterans' organizations described in IRC Section 170(c)(3) can receive tax-deductible contributions even though they are not 501(c)(3) organizations.

  6. What term describes a private foundation that converts to a public charity status by meeting the public support test for five consecutive years?

    Answer: Termination by distribution to a public charity or by becoming a public charity

    A private foundation can terminate its private foundation status by distributing all assets to a public charity or by qualifying as a public charity under the public support test for 60 months.

  7. Under the quid pro quo contribution rules, when must a charity provide a written disclosure statement to a donor?

    Answer: When a donor pays more than $75 and receives goods or services in return

    A charity must provide a written disclosure statement when it receives a quid pro quo contribution exceeding $75, informing the donor of the deductible and non-deductible portions.