HS 330 Flashcards – Module 8
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[h] HS330 – Module 8
[q] Qualified charitable organization
[a] An organization operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals.
[q] Partial interest
[a] An arrangement in which a donor wants both a family member and a charity to benefit from the use of property. Typically, this arrangement is not eligible for the charitable deduction (there are exceptions).
[q] Partial interests that are eligible for charitable deduction
[a] Interests that are eligible for deduction:
Portion of a decedent’s entire interest in property.
Remainder interest in a farm.
Remainder interest in a residence.
Charitable remainder trust.
Pooled-income fund.
Charitable lead trust.
[q] Charitable remainder trust
[a] An irrevocable trust in which the donor transfers property and receives a payment each year from the trust. When the trust ends, any remaining balance in the trust is transferred to one or more charities. The trust can last for the donor’s life, or a term of up to 20 years. The donor receives an immediate income tax deduction when property is transferred to the trust.
[q] Charitable remainder annuity trust (CRAT)
[a] A type of charitable remainder trust in which the donor receives a fixed payment from the trust at least annually. Once established, additional contributions of property to the trust are not permitted.
[q] Charitable remainder unitrust (CRUT)
[a] A type of charitable remainder trust in which the donor receives an uncertain payment from the trust at least annually. Once established, additional contributions of property to the trust are allowed.
[q] Charitable remainder trust payout percentage
[a] A percentage expressed in a charitable remainder trust document that is used to determine the payment the grantor will receive from the trust. The rate cannot be less than 5%, nor can it exceed 50%.
[q] Pooled-income fund
[a] A fund that contains commingled donations from numerous sources, similar to a mutual fund. A donor receives an immediate income tax charitable deduction when transferring property to the fund.
[q] Charitable lead trust
[a] An irrevocable trust in which the donor transfers property. At least annually, one or more charities receives a payment from the trust. When the trust ends, any remaining balance in the trust is transferred to the grantor or other non-charitable beneficiary, such as the grantor’s family.
[q] Charitable lead annuity trust (CLAT)
[a] A type of charitable lead trust in which a charity receives a fixed payment from the trust at least annually.
[q] Charitable lead unitrust (CLUT)
[a] A type of charitable lead trust in which a charity receives an uncertain payment from the trust at least annually.
[q] Charitable gift annuity
[a] A contract entered into with a charity, in which the donor transfers property to the charity in return for an annuity for the donor’s life. The donor receives an immediate income tax deduction when contributing the property to the charity.
[q] Community foundation
[a] A grant-making entity that benefit the community. Donor contributions are used to establish a fund or account. A committee determines the needs of the community, and allocates funds accordingly.
[q] Donor-advised fund
[a] A charitable giving vehicle established at a public charity. It allows donors to make a charitable contribution, receive an immediate tax deduction and then recommend grants from the fund over time.
[q] Private foundation
[a] A charitable entity that is created, funded, and run by a donor or the donor’s family. The organization makes contributions to one or more public charities.
[q] State inheritance tax
[a] A type of state death tax imposed on an individual’s right to inherit property from the estate of a decedent. The tax is based on 1) the value of the property received by each beneficiary and 2) the rate of the tax.
[q] State estate tax
[a] A type of state death tax imposed on a decedent’s right to transfer or pass property to beneficiaries.
[q] State death tax treatment of real property
[a] Generally taxable only by the state in which the property is located.
[q] State death tax treatment of tangible personal property
[a] Generally taxable by the state in which the property is usually kept.
[q] State death tax treatment of intangible personal property
[a] Property that may be subject to multiple state death taxation.
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