4.8.4 Basic Quiz -- Sale and Unitrust

Typically, purchasers of a business like to buy the company as a whole rather than simply the asset.

True False

It is allowable for a limited liability company (LLC) to transfer some of its assets into a charitable remainder trust (CRT) and continue to own the remainder of the assets.

True False

If a partnership transfers a few of its assets to a CRT to sell tax-free, but sells the remainder of its assets outright, the partners may owe some taxes on that sale.

True False

If a partnership or LLC is contemplating transferring some of its assets to a CRT, the partnership or LLC should be careful to ensure that no active trade or business income is attributable to those assets.

True False

A donor who transfers a portion of his or her LLC shares into a CRT, can allocate his or her entire basis in the LLC shares to those kept outside of the CRT so that less capital gains tax will be owed.

True False

In a sale and unitrust transaction, if the charitable deduction is equal to the capital gains tax, then there is a zero-tax transaction.

True False

If a donor wishes to utilize the sale and unitrust method to achieve a zero-tax scenario, the donor must consider how much of the income tax deduction that he or she can utilize.

True False

If an LLC wishes to transfer assets into a CRT, it should ensure that there is no debt on those assets.

True False

Once a CRT receives assets from a partnership or LLC, it can then sell those assets to anyone so long as the sale price is at least fair market value.

True False

If an LLC owns a parcel of real estate and a public charity would like to purchase that property, a CRT could not be used because a sale to the remainder beneficiary charity is deemed to be an act of self-dealing.