Timing Of Charitable Deductions

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Timing Of Charitable Deductions

This quiz is part of the 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. 
    Which of the following are completed deductible gifts?
    • A. 

      Donor delivers money or property to a charity with a limitation that it must be spent on a particular person specified by the donor

    • B. 

      Donor delivers valuable property to a charity, but keeps retained interests that are not specifically allowed by statute

    • C. 

      Donor gives money or property to the donor’s agent with instructions to deliver the money or property to the charity

    • D. 

      Donor promises to deliver money or property to the charity in 3 days

    • E. 

      Donor delivers money or property to an agent representing the charity, but the agent will not actually transfer the money or property to the charity for another 30 days

  • 2. 
    In what circumstance will the IRS permit an organization to deduct a charitable gift that is made after the close of the tax year?
    • A. 

      A C-corporation, s-corporation, or partnership passes a resolution authorizing the giving during the tax year, and then gifts within three months of the close of the tax year

    • B. 

      A C-corporation, using cash accounting, passes a resolution authorizing the giving during the tax year and then gifts within two months of the close of the tax year

    • C. 

      A C-corporation, using accrual accounting, passes a resolution six days after the close of the tax year authorizing charitable giving that is then carried out the following day

    • D. 

      A C-corporation using accrual accounting, passes a resolution authorizing the giving during the tax year, and then gifts within two and one-half months of the close of the tax year

    • E. 

      A C-corporation makes a gift 48 hours after the close of the tax year although no board resolution is involved

  • 3. 
    On which day was the gift completed for tax purposes?
    • A. 

      Day 1: I put cash into an envelope addressed to a charity

    • B. 

      Day 2: I put the envelope with proper postage in the mail

    • C. 

      Day 4: The cash arrives at the charity

    • D. 

      Day 5: The charity deposits the cash in its bank account

    • E. 

      There was no charitable gift

  • 4. 
    On which day was the gift completed for tax purposes?
    • A. 

      Day 1: I write a check to a charity

    • B. 

      Day 2: I put the check in the post office mailbox with proper address and postage

    • C. 

      Day 3: The charity receives the check

    • D. 

      Day 5: The charity’s bank receives the funds and the charity is credited with the funds

    • E. 

      There was no deductible charitable gift

  • 5. 
    On which day was the gift completed for tax purposes?
    • A. 

      Day 1: I write a check to a charity

    • B. 

      Day 2: I put the check in the post office mailbox with proper address and postage

    • C. 

      Day 3: The charity receives the check

    • D. 

      Day 5: The charity’s bank receives notice of insufficient funds and the check is not honored

    • E. 

      There was no deductible charitable gift

  • 6. 
    On which day was the gift completed for tax purposes?
    • A. 

      Dec 26: I put a check, post-dated for January 1, in the post office mailbox with proper address and postage

    • B. 

      Dec 31: The charity receives the check

    • C. 

      Jan 1: Nothing happens

    • D. 

      Jan 2: The charity deposits the check and is credited with the funds

    • E. 

      There was no deductible charitable gift

  • 7. 
    On which day was the gift completed for tax purposes?
    • A. 

      Dec 25: I sign a promise to donate to charity prior to the end of the year

    • B. 

      Dec 31: I make a donation by credit card and the charity is credited with the funds

    • C. 

      Jan 20: I receive a credit card statement noting the donation

    • D. 

      Jan 30: I pay my credit card bill in full

    • E. 

      There was no deductible charitable gift

  • 8. 
    On which day was the gift completed for tax purposes?
    • A. 

      Day 1: I earn $20 in rebates from my credit card company

    • B. 

      Day 2: I click online on my credit card company website to donate those rebates to a charity

    • C. 

      Day 9: The credit card company mails a check to the charity

    • D. 

      Day 10: The charity receives a check from the credit card company

    • E. 

      There was no deductible charitable gift

  • 9. 
    On which day was the gift completed for tax purposes?
    • A. 

      Dec. 1: I sign a legally enforceable contract (a pledge) to give $100,000 to the charity on August 1

    • B. 

      Dec. 5: The charity books this as an asset in their general ledger

    • C. 

      Dec. 10: The charity sells the rights to this pledge to an accounts receivable purchasing agency for $90,000

    • D. 

      Dec. 11: The charity spends the $90,000

    • E. 

      Aug. 1: I pay the $100,000 pledge to the charity

  • 10. 
    I give land worth $1 million to a public charity and retain a two year option to repurchase the land for $700,000.  How much can I deduct today?
    • A. 

      $0

    • B. 

      $500,000

    • C. 

      $1.5 Million

    • D. 

      $2 Million

    • E. 

      Only the rental value

  • 11. 
    I give land worth $2 million to a public charity and retain a two year option to repurchase for $500,000.  After the option expires, how much can I deduct?
    • A. 

      $0

    • B. 

      $500,000

    • C. 

      $1.5 Million

    • D. 

      $2 Million

    • E. 

      Only the rental value

  • 12. 
    Which of the following restrictions on a gift to a university will make the gift non-deductible?
    • A. 

      The university must use these funds for football scholarships

    • B. 

      The university must use these funds for a scholarship limited to female, international graduate students studying English literature

    • C. 

      The university must use these funds for to pay the tuition for Sarah P. Student, a person unrelated to the donor

    • D. 

      The university must use these funds to purchase a pipe organ for the music department

    • E. 

      None of the restrictions will make the gift non-deductible.

  • 13. 
    Jonathan donates $500 to a local bank for a family who lost their house in a mud slide.  Feeling bad for the family, Jonathan also spends three full days (i.e. 8 hours per day) volunteering for the Red Cross, which is taking the lead on restoring their house.  How much can Jonathan deduct for charitable donations?  Jonathan’s wage rate is $10 per hour, and he spent $25 on reasonable expenditures while donating his services.  
    • A. 

      $0

    • B. 

      $25

    • C. 

      $240

    • D. 

      $500

    • E. 

      $765

  • 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!