Charitable Giving and Endowments

Question 1

What is the deduction limitation for cash to a private foundation?

Answer 1

30%

Question 2

What is the deduction limitation and rules for Long Term Capital Gain property to a public charity?

Answer 2

30%.

FMV unless election is made to deduct basis up to 50% of AGI.

Question 3

What is the deduction limitation and rule for tangible property to a private foundation?

Answer 3

20% basis

Question 4

What is the deduction limitation and rule for Long Term Capital Gain property to a private foundation?

Answer 4

20%.

Basis unless qualified appreciated stock then FMV.

Question 5

What is the deduction limitation and rule for Short Term Capital Gain property to a private foundation?

Answer 5

30% Basis

Question 6

What is the deduction limitation and rule for Short Term Capital Gain property to a public charity?

Answer 6

50% basis

Question 7

What is the carry-forward for charitable contributions in excess charitable contributions?

Answer 7

5 years.

Question 8

What is the maximum term for a CRT?

Answer 8

20 years

Question 9

Who pays the income tax on a CLT?

Answer 9

for a Grantor CLT - the Grantor

for a non-Grantor CLT - the trust pays the income tax and the Grantor does not get a deduction.

Question 10

What is the maximum term for a CLT?

Answer 10

No max term

Question 11

What is the minimum payout for a CRT?

Answer 11

5%

Question 12

What is the maximum payout for a CRT?

Answer 12

50%

Question 13

What is the maximum payout for a CRT?

Answer 13

50%

Question 14

What percent of the initial trust value must be left as a remainder interest for the charity?

Answer 14

10%

Question 15

Which Charitable Trust is tax exempt?

Answer 15

CRT

Question 16

What is the four-tier system for the income tax character of the distributions made from a CRT?

Answer 16

1. Ordinary income.
2. Capital gains.
3. Other income.
4. Distribution of principal.

Question 17

Which strategy is intended to provide a hedge against inflation?

Answer 17

CRUT

Question 18

Which Trust provides the opportunity for the non-charitable beneficiary to be paid the lesser of the trust’s net accounting income or a fixed percentage of the value of the trust without a make-up provision?

Answer 18

NICRUT

Question 19

what are characteristics of a NIMCRUT

Answer 19

1. If there is a short-fall of annual income based on the fixed percentage expectation the shortfall is to be made up in the future.
2. The Trust pays the lower of the unitrust amount or the trust accounting income.
3. When the income exceeds the unitrust amount the income is made up.

Question 20

What is a Flip CRUT?

Answer 20

Begins as a NICRUT or NIMCRUT and converts to a standard CRUT on a triggering event.
The unitrust percentage is the same before and after the flip
The triggering event is a “specific date or event whose occurrence is not discretionary or within the control of, the trustees or any other person”

Question 21

What are the tax ramifications of UBTI?

Answer 21

• UBTI may result in double taxation (i.e., UBTI may be taxed to the plan or charitable organization and also to the plan participants or beneficiaries)
• UBTI could be subject to both state and federal taxation

Question 22

Who (what) is typically impacted by UBTI?

Answer 22

UBTI is most commonly associated with activities within retirement funds/plans or charitable organizations or structures

Question 23

Are there excise taxes levied on net investment income in a private foundation?

Answer 23

Yes

Question 24

What are the tax ramifications for gifted assets with unrealized gains?

Answer 24

Gains are not taxed to donor if conditions are met

Question 25

What are the tax ramifications for gifted assets with unrealized losses?

Answer 25

For gift property worth less than the donor’s basis, the deduction is limited to fair market value

In that instance, it is usually more advantageous to sell property with unrealized losses before gifting thus securing the benefit of the capital loss, and then give cash to charity

Question 26

What are the tax ramifications for gifted assets that are leveraged

Answer 26

Gain scenario: donor deducts fair market value of the appreciated asset at the date of gift minus debt, subject to deduction limitations