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GiftLaw Pro Home   >  Chapter 5 - Difficult Property Gifts  >  5.4 Jeopardizing The Charitable Remainder  >  5.4.1 Jeopardizing the Charitable Interest  >  Basic Quiz

Basic Quiz - 5.4.1 Jeopardizing the Charitable Interest

1. Private foundations are subject to the rules on jeopardy investments.
           
2. A penalty tax of 10% is levied on jeopardy investments.
           
3. Trading on margin is never considered a jeopardy investment.
           
4. The tax levied on jeopardy investments is voluntary.
           
5. Unbeknown to Bob, one of three managers at the Builder's Foundation, some of the private foundation's assets were invested in inherently risky oil wells. Bob is not subject to a penalty tax.
           
6. If Bob, from the Builder's Foundation, knowingly made a jeopardy investment, he would be subject to a 10% penalty tax.
           
7. Trustees of charitable remainder trusts (CRTs) are subject to the restrictions of Sec. 4944.
           
8. There is no specific definition of "jeopardy investments" in the IRS Code.
           
9. If the private foundation continues with a jeopardy investment after the imposition of the 10% penalty, an additional 25% penalty will be imposed.
           
10. A foundation manager is wise to consider the expected return of an investment and the risk associated with an investment strategy before investing.