Charitable Gifts Of Property

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Charitable Gifts Of Property

This quiz is part of the introductory curriculum for the graduate course Personal Financial Planning 5325 "Introduction to Charitable Planning" from Texas Tech University. For free downloads of the audio lectures and PowerPoint slides for this course, or to learn about the online Graduate Certificate in Charitable Financial Planning at Texas Tech University, go to www. EncourageGenerosity. Com


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Questions and Answers
  • 1. 
    When can you deduct the portion of value of a gift of property that has previously been deducted as a depreciation deduction?
    • A. 

      Only when fair market valuation is permitted

    • B. 

      Only when cost basis valuation is permitted

    • C. 

      When either cost basis or fair market valuation is permitted

    • D. 

      Only when giving to a public charity

    • E. 

      Never

  • 2. 
    I give real estate to a public charity.  I originally paid $10,000 for it 2 months ago.  I have taken no depreciation deductions.  Its current fair market value is $20,000.  What is the maximum deductible amount of this gift?
    • A. 

      $0

    • B. 

      $5,000

    • C. 

      $10,000

    • D. 

      $15,000

    • E. 

      $20,000

  • 3. 
    I give real estate to a private (non-operating) foundation.  I originally paid $10,000 for it 2 years ago.  I have taken depreciation deductions for $5,000 of that original price.  Its current fair market value is $20,000.  What is the maximum deductible amount of this gift?
    • A. 

      $0

    • B. 

      $5,000

    • C. 

      $10,000

    • D. 

      $15,000

    • E. 

      $20,000

  • 4. 
    I give real estate to a public charity.  I originally paid $10,000 for it 2 years ago.  I have taken depreciation deductions for $5,000 of that original price.  Its current fair market value is $20,000.  What is the maximum deductible amount of this gift?
    • A. 

      $0

    • B. 

      $5,000

    • C. 

      $10,000

    • D. 

      $15,000

    • E. 

      $20,000

  • 5. 
    I give real estate to a public charity.  I originally paid $10,000 for it 2 years ago.  I have taken depreciation deductions for $5,000 of that original price.  Its current fair market value is $20,000.  I take a special election so that I can deduct long-term capital gain gifts up to 50% of my income.  What is the maximum deductible amount of this gift?
    • A. 

      $0

    • B. 

      $5,000

    • C. 

      $10,000

    • D. 

      $15,000

    • E. 

      $20,000

  • 6. 
    I give furniture (not considered business inventory) from my home business to a public charity.  I originally paid $10,000 for it 2 years ago.  I have taken depreciation deductions for $5,000 of that original price.  Its current fair market value is $20,000.  The charity sells the furniture at its annual benefit auction.  What is the maximum deductible amount of this gift?
    • A. 

      $0

    • B. 

      $5,000

    • C. 

      $10,000

    • D. 

      $15,000

    • E. 

      $20,000

  • 7. 
    I give good quality furniture (not considered business inventory) from my home business to a public charity.  I originally paid $10,000 for it 2 years ago.  I have taken depreciation deductions for $5,000 of that original price.  Its current fair market value is $20,000.  The charity uses the furniture in its business office.  What is the maximum deductible amount of this gift?
    • A. 

      $0

    • B. 

      $5,000

    • C. 

      $10,000

    • D. 

      $15,000

    • E. 

      $20,000

  • 8. 
    I give shares of Microsoft Corporation to a private (non-operating) foundation.  I originally paid $10,000 for it 2 years ago.  Its current fair market value is $20,000.   What is the maximum deductible amount of this gift?
    • A. 

      $0

    • B. 

      $5,000

    • C. 

      $10,000

    • D. 

      $15,000

    • E. 

      $20,000

  • 9. 
    I give shares representing 20% ownership in a local locksmith business to a private (non-operating) foundation.  I originally paid $10,000 for the shares 2 years ago.  Their current fair market value is $20,000.   What is the maximum deductible amount of this gift?
    • A. 

      $0

    • B. 

      $5,000

    • C. 

      $10,000

    • D. 

      $15,000

    • E. 

      $20,000

  • 10. 
    I give several bags of clothing in poor condition to the local Salvation Army charity.  Originally, I purchased the clothes for a total of $4,000 three years ago.  I have a qualified appraisal that proves the total value of the clothes is $400.  What is the maximum deductible amount of this gift?
    • A. 

      $0

    • B. 

      $400

    • C. 

      $3,600

    • D. 

      $4,000

    • E. 

      $4,400

  • 11. 
    I give an automobile to a local public charity.  I purchased the car for $5,000 three years ago.  I have a qualified appraisal that proves the current value of the car is $6,000.  After receiving the car, the charity sells it at a poorly attended benefit auction for $800.  What is the maximum deductible amount of this gift?
    • A. 

      $0

    • B. 

      $500

    • C. 

      $800

    • D. 

      $5,000

    • E. 

      $6,000

  • 12. 
    A newly formed local natural history museum (a public charity) puts out a request for donations of specimens of rare animals, such as the Komodo dragon.  To do my civic duty I purchase a special lizard gun, fly to Indonesia, stay in a local village, track down a Komodo dragon, shoot it, pay to have it stuffed at a local taxidermist, attempt to take is as carry-on luggage, then have to pay an extra checked baggage fee at the gate, return home and donate the stuffed dragon to the natural history museum.  The natural history museum uses the dragon in its display entitled “recently killed endangered animals.”   My expenses are travel=$2,000; meals & lodging =$1000; special lizard gun=$1,000; cost of taxidermy=$200.  A qualified appraiser values the stuffed dragon at $6,000.  What is the maximum deductible amount of this gift?
    • A. 

      $0

    • B. 

      $200

    • C. 

      $3,200

    • D. 

      $4,200

    • E. 

      $6,000

  • 13. 
    I write a new book on the History of Ducks Unlimited.  I donate the copyright for the book to Ducks Unlimited (a public charity).  A qualified appraisal indicates that the copyright is worth $50,000.  My cost basis in creating the book was only about $50 worth of paper and ink.  How much can I deduct for this gift?
    • A. 

      $0

    • B. 

      $50

    • C. 

      $50,000

    • D. 

      $50 + a share of revenue from the copyright for the next 12 years

    • E. 

      $50,000 + a share of revenue from the copyright for the next 12 years

  • 14. 
    I create a piece of artwork involving my shredding, gluing and painting hundred dollar bills to a canvass.  My cost basis in creating the art is $10,000.  The art is ugly and pointless and has a fair market value of $1.  I give this art to a local art gallery (a public charity), and they place it in their quarterly public auction.  How much can I deduct for my gift of art to the charity?
    • A. 

      $0

    • B. 

      $1

    • C. 

      $9,999

    • D. 

      $10,000

    • E. 

      $10,001

  • 15. 
    A local public charity for children puts out a request for new stuffed animals.  I give 500 stuffed animals, each of which normally retails for $10 at local specialty shops ($10 X 500 = $5,000).  I purchased the stuffed animals in an e-bay auction 15 months ago, where I was able to buy the entire lot for $2,000.  When sold in lots of 500, these stuffed animals usually sell for $2,500 per lot today.  The charity accepts the gift and uses the stuffed animals in its charitable operations.  How much can I deduct for my gift?
    • A. 

      $0

    • B. 

      $2,000

    • C. 

      $2,500

    • D. 

      $3,000

    • E. 

      $5,000

  • 16. 
    Sarah donor takes her grandmother’s antique solid gold tea set out of her attic.  She has owned it for many years following the death of her grandmother.  Sarah decides to give it to the local historical society (a public charity), and they use it as a regular part of one of their seasonal displays for visitors.  Sarah investigates the value of the tea set by checking various auction sites and guesses it is worth about $200,000.  She gets a qualified appraisal (at a price of $100) showing the value to be $200,000.  She deducts the $200,000 and pays $40,000 less tax because of the deduction.  After the deduction is taken, the IRS auditor uncovers that, in fact, this particular tea set was a reproduction, rather than an original, and its actual value was only $110,000, and that Sarah should have paid $18,000 more in taxes.  In addition to correcting the valuation error and paying the taxes due, what additional penalties for the valuation error will the IRS charge?
    • A. 

      $0 to the taxpayer; $125 to the appraiser

    • B. 

      $0 to the taxpayer; $1000 to the appraiser

    • C. 

      $0 to the taxpayer; $1,800 to the appraiser

    • D. 

      $3,600 to the taxpayer, $125 to the appraiser

    • E. 

      $7,200 to the taxpayer, $0 to the appraiser

  • 17. 
    Thanks for taking the quiz!  The rest of the free online curriculum, including slides and audio lectures, is at www.EncourageGenerosity.com.  Our ability to create and post new curriculum depends on being able to prove that it is actually being used by professionals in nonprofits or financial advising.  It would help us tremendously if you would write your name and the name of your organization below, so that we will have evidence that this product is being used.  Thanks!