Planned Giving Overview

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Planned Giving Overview

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. 
    The largest amount of money is held by
    • A. 

      Charitable remainder trusts

    • B. 

      Charitable lead trusts

    • C. 

      Donor advised funds

    • D. 

      Private Foundations

    • E. 

      Pooled Income Funds

  • 2. 
    All of the following are required in order to be a public charity EXCEPT
    • A. 

      The organization must be operated for a charitable purpose

    • B. 

      Net income must not benefit a private person (i.e., profit is not distributed)

    • C. 

      The organization, if it is not a church, must initially file IRS Form 1023 to seek recognition of exempt status

    • D. 

      The organization, if it is not a church, must annually file IRS Form 990

    • E. 

      The organization must not spend any money on lobbying

  • 3. 
    About how many 501(c)3 public charities are there in the U.S. (not counting non-filing churches)?
    • A. 

      10,000

    • B. 

      100,000

    • C. 

      1,000,000

    • D. 

      10,000,000

    • E. 

      100,000,000

  • 4. 
    In which of the following gifting arrangements might a donor expect to receive income for life?
    • A. 

      Charitable Lead Trust

    • B. 

      Pooled Income Fund

    • C. 

      Private Foundation

    • D. 

      Donor Advised Fund

    • E. 

      Outright gift of appreciated securities

  • 5. 
    According to data from 2007 which type of entity gave the smallest share of its total assets to charitable organizations during the year?
    • A. 

      Charitable Lead Trust

    • B. 

      Pooled Income Fund

    • C. 

      Charitable Remainder Trust

    • D. 

      Private Foundation

    • E. 

      Donor Advised Fund

  • 6. 
    If a client wants to accomplish specific charitable goals over many decades, which of the following is an advantage of the private foundation over the donor advised fund?
    • A. 

      Private foundations are less expensive to start than donor advised fund accounts

    • B. 

      Private foundations require less administrative costs to maintain

    • C. 

      Private foundations legally must follow the guidelines established by the originating documents

    • D. 

      Contributions to private foundations receive an immediate tax deduction

    • E. 

      Private foundations are allowed to hold money without making any charitable distributions for many years

  • 7. 
    What is the largest donor advised fund operated by a mutual fund / investment company?
    • A. 

      Vanguard

    • B. 

      Schwab

    • C. 

      Fidelity

    • D. 

      TD Waterhouse / Ameritrade

    • E. 

      Merrill Lynch, Pierce, Fenner, & Smith

  • 8. 
    A major tax advantage that comes from giving appreciated property rather than money to charitable organizations is that such gifts
    • A. 

      Are tax deductible for income tax purposes

    • B. 

      Reduce estate taxes by lowering the size of the estate

    • C. 

      Avoid the stepped-up basis at death

    • D. 

      Avoid the capital gains tax

    • E. 

      Avoid the gift tax

  • 9. 
    A potential donor purchased corporate stock for $1,000 that is now worth $11,000.  How much capital gain, subject to capital gains tax, will the donor have if he or she sells the stock for $11,000?
    • A. 

      $1,000

    • B. 

      $2,000

    • C. 

      $9,000

    • D. 

      $10,000

    • E. 

      $11,000

  • 10. 
    A potential donor purchased corporate stock for $1,000 that is now worth $11,000.  This person pays state and federal capital gains at a combined rate of 20%.  How much capital gains tax will the donor pay if he or she sells the stock for $11,000?
    • A. 

      $1,000

    • B. 

      $2,000

    • C. 

      $9,000

    • D. 

      $10,000

    • E. 

      $11,000

  • 11. 
    A potential donor purchased corporate stock for $1,000 that is now worth $11,000.  This person pays state and federal capital gains at a combined rate of 20%.  How much money will the donor have left to spend if she sells the stock and pays the capital gains tax?
    • A. 

      $1,000

    • B. 

      $2,000

    • C. 

      $9,000

    • D. 

      $10,000

    • E. 

      $11,000

  • 12. 
    A potential donor purchased corporate stock for $1,000 that is now worth $11,000.  This person itemizes deductions and pays income taxes at a combined state and federal rate of 40%.  How much is the charitable tax deduction worth to the donor if the donor gives the stock to a charitable organization?
    • A. 

      $0

    • B. 

      $10,000 x 40% = $4,000

    • C. 

      $10,000

    • D. 

      $11,000 x 40% = $4,400

    • E. 

      $11,000

  • 13. 
    A potential donor purchased corporate stock for $1,000 that is now worth $11,000.  This person itemizes deductions, pays income taxes at a combined state and federal rate of 40%, and capital gains tax at a combined rate of 20%.  He would receive a net of $9,000 from selling the stock and paying the capital gains tax ($11,000 - $2,000 capital gains tax).  He would receive a tax benefit worth $4,400 from the charitable deduction for giving the stock to a public charity ($11,000 X 40%).  For this potential donor, what is the net cost of making an $11,000 gift to charity of this stock as compared with selling the stock?
    • A. 

      $0

    • B. 

      $4,600

    • C. 

      $6,600

    • D. 

      $10,000

    • E. 

      $11,000

  • 14. 
    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!