Friday, April 26, 2024
Charitable Organizations
7.2.3 Basic Quiz -- Minimum and Qualifying Distributions
Each year a private foundation is required to distribute at least 50% of its assets for charitable purposes.
True
False
Private foundations are allowed to maintain a cash reserve of up to 10% of its investment assets.
True
False
Distributions that count towards the 5% minimum distribution are known as "qualified distributions."
True
False
Private foundation "A's" distribution to private foundation "B" requires that "A" exercise expenditure responsibility in order for the distribution to qualify under the 5% minimum distribution test.
True
False
If a private foundation makes a grant to a public charity, it must follow the same procedures for "expenditure responsibility."
True
False
Sec. 74(b) of the Internal Revenue Code allows a private foundation to issue a prize or an award to the son or daughter of a selected employee of the foundation.
True
False
A private foundation may set up a donor advised fund (DAF) and make distributions that qualify for the 5% minimum to the DAF.
True
False
The failure of a private foundation to make the minimum distributions results in the imposition of an excise tax.
True
False
Should a private foundation not correct the minimum distribution amount, the IRS will impose another excise tax of 200% on the amount that ought to have been distributed.
True
False
To calculate the 5% minimum distribution amount, the fair market value for the preceding year of a foundation's investment assets, less debt incurred to acquire them, are determined and this amount is reduced by the amount of the foundation's allowable cash reserves.
True
False
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