Regulatory Compliance & Law Flashcards
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Read the first 7 Regulatory Compliance & Law flashcards as text
Under IRC Section 4941, which of the following is classified as a 'self-dealing' transaction between a private foundation and a disqualified person?
Answer: Sale of property by the foundation to a disqualified person
IRC Section 4941 prohibits self-dealing transactions including sales of property between a private foundation and a disqualified person, regardless of whether the transaction is at fair market value.
A donor establishes a charitable remainder unitrust (CRUT). Which IRS form must the trustee file annually to report the trust's activities?
Answer: Form 5227
Form 5227 (Split-Interest Trust Information Return) must be filed annually by trustees of charitable remainder trusts, charitable lead trusts, and pooled income funds.
Which type of organization is subject to the excise tax on net investment income under IRC Section 4940?
Answer: Private foundations
IRC Section 4940 imposes a 1.39% excise tax on the net investment income of private foundations, not on public charities or other exempt organizations.
A private foundation makes a grant to an organization that is NOT a public charity. Under IRS rules, the foundation must exercise what level of oversight?
Answer: Expenditure responsibility
When a private foundation grants to a non-public charity (including foreign organizations), it must exercise expenditure responsibility, ensuring funds are used for the charitable purpose specified.
Under the Pension Protection Act of 2006, what is required for a donor to claim a deduction for a cash charitable contribution of any amount?
Answer: A bank record or written communication from the charity showing the date and amount
The Pension Protection Act of 2006 requires that cash donations of any amount be substantiated by a bank record or written communication from the charity showing the date and amount.
A charitable lead annuity trust (CLAT) provides income to a charity for a term of years. At the end of the term, the remainder passes to whom?
Answer: The donor's heirs or other non-charitable beneficiaries
In a CLAT, the charity receives annuity payments during the trust term, and at termination the remainder passes to the donor's heirs or other non-charitable beneficiaries.
Which of the following best describes the 'quid pro quo' contribution rule under IRC Section 6115?
Answer: When a donor receives goods or services in exchange for a contribution exceeding $75, the charity must provide a written disclosure
IRC Section 6115 requires charities to provide written disclosure for quid pro quo contributions exceeding $75, stating that only the amount above the fair market value of any benefit received is deductible.