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GiftLaw Pro Home   >  Chapter 1 - Taxation and Giving  >  1.5 Valuation of Gifts  >  1.5.3 Valuation Discounts  >  Basic Quiz

Basic Quiz - 1.5.3 Valuation Discounts

1. Because gift tax is imposed on the value of property transferred, many donors wish to minimize the value of such property for gift tax valuation purposes.
           
2. Because income tax deductions are based upon the value contributed to charities, many donors wish to maximize the valuation of property transferred to charities.
           
3. Family limited partnerships (FLPs), limited liability companies (LLCs) and grantor retained annuity trusts (GRATs) are popular methods for reducing values for gift and estate tax purposes.
           
4. Today, most gift tax audits by the Internal Revenue Service focus on valuation issues and the validity of the valuation discounts taken by taxpayers.
           
5. Gifts of closely held C corporation stock may produce a valuation discount.
           
6. S corporations are similar to C corporations in that they both have limited liability protection and two layers of taxation.
           
7. LLCs are taxed like a partnership, yet have the liability protection of a corporation.
           
8. An excellent way to get a "double discount" is to combine a FLP or LLC with a charitable lead trust (CLT).
           
9. A gift of an undivided interest in real property is a nondeductible partial interest gift.
           
10. A gift of an undivided interest in property to a charity may cause the donor's income tax deduction to be reduced.