CPA · Question 29 · Area 2: Financial Planning
A taxpayer contributes $50,000 to a Charitable Remainder Annuity Trust (CRAT). The trust pays the taxpayer an annuity for life, with the remainder going to charity. The present value of the remainder interest is calculated to be $4,000. Does this trust qualify as a CRAT?
Answer options:
No, because the remainder interest is less than 10% of the contribution.
Yes, as long as the annuity is at least 5%.
Yes, because there is a charitable intent.
No, because the contribution is too small.
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