5.        John and Lisa go to a charity dinner-dance and pay $450 for the tickets. The fair market value of the ticket is $185. All proceeds from the event go directly to this qualified charity. They file a joint tax return and are aware that the value of the tickets is LESS THAN what was paid. The allowable charitable contribution on their federal tax return should be:

 

a.            $185

b.            $225

c.             $265

d.            $450

 

 

6.        Paul is a recently divorced businessman who had a sole proprietorship. In 2010, he inherited an office building upon the death of his mother, Mary. In 2017, Paul decided to donate the building to a qualified charity. This transfer was not made in trust. Regarding this transaction:

 

a.            Paul is allowed a deduction for his contribution

b.            only 20% of the fair market value of the gift may be allowed as a deduction

c.             it is not an allowable deduction since it cannot be considered to be a contribution of an undivided portion of Paul's entire interest in the property

d.            both a and b

 

7.        Robert died in 2018 with a gross estate of $7.5 million dollars. A charitable bequest in the amount of $1,500,000 was made. As a result of the bequest, Robert's estate for estate tax purposes:

 

a.            was reduced by 60% of the bequest amount

b.            remained at $7.5 million as a bequest cannot reduce the estate

c.             was lowered by the amount of the bequest

d.            was first reduced by $1,000,000 before add-ins from the cost basis of assets adjusted for the final deduction to the gross estate

8.        A charitable remainder annuity trust (CRAT) is characterized by which of the following?

 

I.              provides a fixed payment, at least annually, to a noncharitable beneficiary

II.            is a revocable remainder trust that turns irrevocable, to be paid to or held for the charity

III.           the value of any remainder interest must be at least 10% of the initial net fair market value (FMV) of all property placed in the trust

IV.          the donor can contribute to the trust at inception and up to 36 months after its creation

 

a.            I and III

b.            I and IV

c.             I and II

d.            II, III, and IV

These are multiple choice