3.10.9 Basic Quiz -- Income, Gift, Estate and Generation-Skipping Transfer Taxes

The creation and funding of a charitable remainder unitrust produces an income tax deduction equal to the present value of the income interest.

True False

The applicable federal rate (AFR), or rate of the month, is the amount that will be distributed from the charitable remainder unitrust each year.

True False

When selecting the applicable federal rate from the available three month period, a CRT donor may choose the rate most favorable to his or her tax position.

True False

One of the advantages of a tax-exempt charitable remainder unitrust is that all distributions from the trust to the donor are tax-free.

True False

A qualified charitable remainder unitrust is usually exempt from income tax.

True False

A testamentary power of revocation permits a donor to revoke the charitable remainderman's interest and distribute the remainder interest to another charity.

True False

A common misconception with regards to a charitable remainder unitrust funded for the benefit of the donor and another person (other than a spouse) is that the trust is excluded from the gross estate of a donor when he or she passes away.

True False

State tax apportionment statutes can reduce transfers into charitable remainder unitrusts in order to pay the estate tax liability.

True False

A charitable remainder unitrust created for grandchildren may be subject to generation skipping transfer tax.

True False

A charitable remainder unitrust created for another person may subject the donor to a taxable gift equal to the present value of the income stream.