Basic Quiz - 4.2.6 Gift Annuity Bailout

1. Parents usually have four goals in contemplating the transition out of their family business: secure retirement income, facilitate a smooth business succession, create a fair inheritance plan and obtain a double depreciation benefit.

True False

2. A business owner who transfers his or her stock in exchange for a charitable gift annuity (CGA), is prohibited from repurchasing the stock from the charity pursuant to the self-dealing rules.

True False

3. If real property is transferred in exchange for a charitable gift annuity, a charity may choose to issue an annuity with a 5%-20% discount

True False

4. If a donor wants to claim a charitable income tax deduction, each transfer of the donor's corporate stock for a CGA must be substantiated by a qualified appraisal if it is not traded on a public exchange.

True False

5. If a corporation sells appreciated real property, the corporation will generate taxable income.

True False

6. C corporations are subject to a 30% AGI limitation for gifts of appreciated property and a 60% AGI limitation for gifts of cash.

True False

7. Since a C corporation has an unlimited life span, it is not permissible to create a charitable gift annuity for the corporation.

True False

8. A donor cannot fund a gift annuity with ordinary income assets.

True False

9. The first step of the gift annuity bailout is to transfer the C corporation to a family limited partnership (FLP).

True False

10. If a gift annuity is funded with an appreciated asset, the donor may completely bypass the capital gain.

True False

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