1.5.1 Basic Quiz -- Fair Market Value

The value of an item for charitable deduction purposes is determined by what the donor thinks the property is worth.

True False

A contribution of cash is valued at its face value minus any adjustment for inflation.

True False

The fair market value of publicly traded stocks and bonds for charitable deduction purposes is the mean of the high and low selling price on the date of the gift.

True False

The valuation of real estate must take into account factors such as zoning requirements and easements.

True False

Mutual funds, which are commonly made up of stocks and bonds, are valued the same way as publicly-traded stocks and bonds.

True False

Gifts of life insurance are treated like gifts of long-term capital gain property.

True False

The charitable deduction for a gift of a "paid-up" life insurance policy is the face value of the policy.

True False

The charitable deduction for a gift of a life insurance policy with premium payments remaining is the face value of the policy.

True False

The overvaluation by donors of gifts of art to charities is a frequent audit item of the Internal Revenue Service.

True False

If the Service determines that a donor has overstated a charitable deduction, the Service can impose a 20% penalty, which is the maximum penalty allowed by law.