Charitable Giving Strategies Flashcards
6 cards from real CAP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Charitable Giving Strategies flashcards as text
Which charitable giving vehicle allows a donor to make a large gift in one year, receive an immediate deduction, and distribute grants to charities over time?
Answer: Donor-advised fund
A donor-advised fund (DAF) allows donors to make an irrevocable contribution, take an immediate tax deduction, and then recommend grants to qualified charities at any future time.
A charitable remainder annuity trust (CRAT) differs from a charitable remainder unitrust (CRUT) primarily in that a CRAT:
Answer: Pays a fixed dollar amount determined at inception
A CRAT pays a fixed annuity amount set at the trust's creation, whereas a CRUT pays a fixed percentage of assets revalued annually.
Under the CAP curriculum, which factor most directly determines the philanthropic capacity of a client?
Answer: The client's wealth, income, and existing charitable commitments relative to lifestyle needs
Philanthropic capacity is assessed by evaluating total wealth, current income, existing obligations, and lifestyle needs to determine how much a client can sustainably give.
Which of the following best describes the concept of bunching charitable contributions?
Answer: Concentrating two or more years of planned donations into one tax year to exceed the standard deduction threshold
Bunching accelerates multiple years of planned giving into a single year so the total itemized deductions exceed the standard deduction, maximizing the tax benefit.
A donor contributes $500,000 of long-term appreciated stock to a public charity. Assuming AGI is $600,000, what is the maximum deductible amount in the contribution year?
Answer: $180,000 (30% of AGI)
Contributions of long-term capital gain property to public charities are deductible at fair market value but limited to 30% of AGI, yielding a $180,000 deduction.
Which charitable vehicle is best suited for a client who wants to make a large gift, pass the remainder to heirs after a fixed term of charity payments, without an income tax deduction at funding?
Answer: Charitable lead annuity trust (CLAT)
A CLAT pays an annuity to charity for a fixed term; the remainder then passes to heirs. A non-grantor CLAT generates a gift/estate tax deduction but not an income tax deduction for the grantor.