1. James and Donna Smith own an insurance brokerage business that they
incorporated fifteen years ago with an initial investment of $500.00. Their
common stock is now worth $1,000,000, and they are considering selling the
business. James and Donna have contacted you to discuss their options. They
would like to sell the business and diversify their investment into various stocks,
bonds and mutual funds. However, they are nervous about the large capital gains
tax they would have to pay.
In order to avoid paying capital gains tax on the sale of their stock, which of the
following transactions would you recommend?
A. Gift the stock to a Special Needs Trust and receive income for life.
B. Gift the stock to a Charitable Lead Trust and reserve a life payout for
themselves.
C. Gift the stock to a Charitable Remainder Trust and reserve a life payout
for themselves.
D. Gift the stock to an Irrevocable Life Insurance Trust and use the proceeds
from sake to purchase life insurance on their lives.
2. Which of the following statements concerning a charitable remainder annuity trust
(CRAT) is correct?
A. The benefit paid to one or more non-charitable income beneficiaries is
a fixed percentage (not less than 5 percent) of the net fair market value
of the trust assets as annually revalued.
B. The annual benefit paid to one or more non-charitable income
beneficiaries is a fixed percentage (not less than 5 percent) of the value
of the assets contributed to the trust.
C. Additional contributions may be made to a CRAT after the initial
payment.
D. The remainder interest will be paid to or held for the benefit of a
political organization either at the death of the last income beneficiary or after
a term of years not greater than 20 years.
3. Ken and Jennifer Mac have donated appreciated real estate valued at $1,000,000 to
a charitable remainder trust. Which of the following tax benefits are available to
them as a result of their gift?
A. Ken and Jennifer receive an income tax deduction against current income
equal to the value of the gift minus the present value of their income interest.
B.Ken and Jennifer pay no capital gains tax when the real estate is sold by the
trustee of the charitable remainder trust.
C.Ken and Jennifer pay no estate tax on the remainder interest which passes to
charity at their deaths.
D.All of the above are tax benefits available.
4. Which of the following is not a characteristic of a Special Needs Trust?
A. The trust is still a “countable resource” for Medicaid eligibility.
B. The trust is not a “countable resource” for Medicaid eligibility.
C. At the death of the special needs beneficiary, the State is entitled to
reimbursement, dollar-for-dollar of any Medicaid benefits paid on behalf of the
trust beneficiary during his or her life.
D. If the trust is an Ohio Supplemental Needs Trust, at the death of the special
needs beneficiary, the State is entitled to reimbursement of 50% of the remainder
of the trust assets.
5. David would like to fund a charitable trust and name himself as the income
beneficiary. He would like for his payout from the trust each year to be stable. Given
David’s desires, which type of charitable trust should David fund?
A. Charitable Lead Annuity Trust.
B. Charitable Lead Unitrust.
C. Charitable Remainder Annuity Trust.
D. Charitable Remainder Unitrust.
6. Which of the following does not qualify as a charitable organization?
A. The Smithfield Methodist Church
B. The Democratic National Committee
C. The Boy Scouts of America
D. The Ohio State University
7. All of the following are methods used to handle the affairs of an incompetent person
EXCEPT:
A. Guardianship
B. Living Will
C. Durable Power of Attorney
D. Trusts
8. Which of the following is a type of Special Needs Trust in Ohio?
A. A Supplemental Needs Trust
B. An Irrevocable Trust
C. A Section 2503 (c) Trust
D. A Pooled Income Trust
9. Which kind of Special Needs Trust in Ohio does not require that the State of Ohio be
paid back for Medicaid payments made to the beneficiary from trust assets at the death of
the special needs beneficiary?
A. A Supplemental Needs Trust
B. A purely discretionary Special Needs Trust
C. A (d)(4)(a) Special Needs Trust
D. A Section 2403(a) Trust
ANSWER: B
10. This year, Dottie donated $10,000 in cash to her church and she also donated medical
supplies with a fair market value and adjusted basis of $20,000 to the Red Cross. Dottie’s
AGI for this year is $50,000. What is Dottie’s charitable contribution deduction for the
year?
A. $10,000.
B. $20,000.
C. $25,000.
D. $30,000.
incorporated fifteen years ago with an initial investment of $500.00. Their
common stock is now worth $1,000,000, and they are considering selling the
business. James and Donna have contacted you to discuss their options. They
would like to sell the business and diversify their investment into various stocks,
bonds and mutual funds. However, they are nervous about the large capital gains
tax they would have to pay.
In order to avoid paying capital gains tax on the sale of their stock, which of the
following transactions would you recommend?
A. Gift the stock to a Special Needs Trust and receive income for life.
B. Gift the stock to a Charitable Lead Trust and reserve a life payout for
themselves.
C. Gift the stock to a Charitable Remainder Trust and reserve a life payout
for themselves.
D. Gift the stock to an Irrevocable Life Insurance Trust and use the proceeds
from sake to purchase life insurance on their lives.
2. Which of the following statements concerning a charitable remainder annuity trust
(CRAT) is correct?
A. The benefit paid to one or more non-charitable income beneficiaries is
a fixed percentage (not less than 5 percent) of the net fair market value
of the trust assets as annually revalued.
B. The annual benefit paid to one or more non-charitable income
beneficiaries is a fixed percentage (not less than 5 percent) of the value
of the assets contributed to the trust.
C. Additional contributions may be made to a CRAT after the initial
payment.
D. The remainder interest will be paid to or held for the benefit of a
political organization either at the death of the last income beneficiary or after
a term of years not greater than 20 years.
3. Ken and Jennifer Mac have donated appreciated real estate valued at $1,000,000 to
a charitable remainder trust. Which of the following tax benefits are available to
them as a result of their gift?
A. Ken and Jennifer receive an income tax deduction against current income
equal to the value of the gift minus the present value of their income interest.
B.Ken and Jennifer pay no capital gains tax when the real estate is sold by the
trustee of the charitable remainder trust.
C.Ken and Jennifer pay no estate tax on the remainder interest which passes to
charity at their deaths.
D.All of the above are tax benefits available.
4. Which of the following is not a characteristic of a Special Needs Trust?
A. The trust is still a “countable resource” for Medicaid eligibility.
B. The trust is not a “countable resource” for Medicaid eligibility.
C. At the death of the special needs beneficiary, the State is entitled to
reimbursement, dollar-for-dollar of any Medicaid benefits paid on behalf of the
trust beneficiary during his or her life.
D. If the trust is an Ohio Supplemental Needs Trust, at the death of the special
needs beneficiary, the State is entitled to reimbursement of 50% of the remainder
of the trust assets.
5. David would like to fund a charitable trust and name himself as the income
beneficiary. He would like for his payout from the trust each year to be stable. Given
David’s desires, which type of charitable trust should David fund?
A. Charitable Lead Annuity Trust.
B. Charitable Lead Unitrust.
C. Charitable Remainder Annuity Trust.
D. Charitable Remainder Unitrust.
6. Which of the following does not qualify as a charitable organization?
A. The Smithfield Methodist Church
B. The Democratic National Committee
C. The Boy Scouts of America
D. The Ohio State University
7. All of the following are methods used to handle the affairs of an incompetent person
EXCEPT:
A. Guardianship
B. Living Will
C. Durable Power of Attorney
D. Trusts
8. Which of the following is a type of Special Needs Trust in Ohio?
A. A Supplemental Needs Trust
B. An Irrevocable Trust
C. A Section 2503 (c) Trust
D. A Pooled Income Trust
9. Which kind of Special Needs Trust in Ohio does not require that the State of Ohio be
paid back for Medicaid payments made to the beneficiary from trust assets at the death of
the special needs beneficiary?
A. A Supplemental Needs Trust
B. A purely discretionary Special Needs Trust
C. A (d)(4)(a) Special Needs Trust
D. A Section 2403(a) Trust
ANSWER: B
10. This year, Dottie donated $10,000 in cash to her church and she also donated medical
supplies with a fair market value and adjusted basis of $20,000 to the Red Cross. Dottie’s
AGI for this year is $50,000. What is Dottie’s charitable contribution deduction for the
year?
A. $10,000.
B. $20,000.
C. $25,000.
D. $30,000.