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GiftLaw Pro Home   >  Chapter 4 - Specific Property Gifts  >  4.10 Proprietorships  >  4.10.5 Gift Annuity Bailout  >  Basic Quiz

Basic Quiz - 4.10.5 Gift Annuity Bailout

1. A gift annuity is a contract between the donor and the charity that writes the gift annuity.
           
2. Only cash can be used to purchase a gift annuity.
           
3. Annuity payments from a gift annuity are 50% taxable and 50% tax free.
           
4. The amount of a gift annuity payment stays the same every year regardless of how the charity invests the asset used to purchase the annuity.
           
5. If a gift annuity is funded with an appreciated asset and the donor does not know his or her cost basis in that asset, the donor can just use the best estimate or guess of what the cost basis in that asset is.
           
6. Charity can sell real property received in exchange for a gift annuity to the children of the donor.
           
7. When a donor funds an annuity for another person and the donor is not an annuitant, the capital gain must be reported in the year the gift annuity is funded.
           
8. If a gift annuity is funded with an appreciated ordinary income asset, the deduction will be reduced.
           
9. If a donor is funding a gift annuity for himself and another person who is not his spouse with appreciated property, the donor will usually report ordinary income and capital gain, while the second person will report ordinary income and tax-free payout.
           
10. When a business owner retires and wants to transfer assets to family the gift annuity bailout can work very effectively.