Friday, May 3, 2024
Gift Administration

8.2.2 Basic Quiz -- CRT Payouts and Four-Tier Accounting
Because charitable remainder trusts (CRTs) are tax-exempt, payments made from them are also tax-exempt.
     True      False
Four-tier accounting is the process of taxing the donor, the trust, income beneficiaries and finally the charitable recipient.
     True      False
The first level of four-tier accounting is ordinary income.
     True      False
Ordinary income payments are those payments received from appreciated property held more than one year.
     True      False
Long-term capital gain property is taxed at the second level of four-tier accounting.
     True      False
Capital gain tax differs depending on whether the property was held for more or less than one year.
     True      False
Tax-free payments are not included in the four-tier accounting structure.
     True      False
Municipal bonds are one example of tax-free income producing properties.
     True      False
The fourth tier of the four-tier accounting structure is the tax-free return of principal.
     True      False
If Tom funds a CRT with $100,000 cash and the trust makes payments to Tom of only principal, Tom's payments will be subject to tier-one taxation.
     True      False



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