Friday, May 3, 2024
Specific Property Gifts

4.7.2 Basic Quiz -- Mortgage or Debt
A gift of debt-encumbered property to a charity is a bargain sale.
     True      False
When a donor transfers debt-encumbered property to a charity, the relief of indebtedness triggers gain to the extent that the debt exceeds the allocated basis.
     True      False
Debt-encumbered property can be sold by the charity at any time without the charity's having to pay any taxes.
     True      False
The "5 and 5" test states that debt-encumbered property given to a charity must have been held by the donor for at least five years and the mortgage must also be at least five years old.
     True      False
If the "5 and 5" test has been met, the charity must sell the property as soon as possible to avoid the unrelated business income tax.
     True      False
If the donor has not held the property for at least five years or the mortgage is not at least five years old, the charity will be unable to accept the property.
     True      False
Even though the donor has to recognize income on the debt relief, it may be possible for the tax savings on the gift to charity to offset the taxable gain on the relief of indebtedness.
     True      False
If the debt is against both the property and the owner personally, the debt is called non-recourse.
     True      False
As the proportion of debt to value is lower, there will be greater charitable tax savings and less gain recognition.
     True      False
When a donor transfers appreciated debt-encumbered property to charity, he or she may use the tax deduction up to 50% of adjusted gross income.
     True      False



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