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GiftLaw Pro Home   >  Chapter 1 - Taxation and Giving  >  1.5 Valuation of Gifts  >  1.5.1 Fair Market Value  >  Basic Quiz

Basic Quiz - 1.5.1 Fair Market Value

1. The value of an item for charitable deduction purposes is determined by what the donor thinks the property is worth.
           
2. A contribution of cash is valued at its face value minus any adjustment for inflation.
           
3. The fair market value of publicly traded stocks and bonds for charitable deduction purposes is the mean of the high and low selling price on the date of the gift.
           
4. The valuation of real estate must take into account factors such as zoning requirements and easements.
           
5. Mutual funds, which are commonly made up of stocks and bonds, are valued the same way as publicly-traded stocks and bonds.
           
6. Gifts of life insurance are treated like gifts of long-term capital gain property.
           
7. The charitable deduction for a gift of a "paid-up" life insurance policy is the face value of the policy.
           
8. The charitable deduction for a gift of a life insurance policy with premium payments remaining is the face value of the policy.
           
9. The overvaluation by donors of gifts of art to charities is a frequent audit item of the Internal Revenue Service.
           
10. If the Service determines that a donor has overstated a charitable deduction, the Service can impose a 20% penalty, which is the maximum penalty allowed by law.