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GiftLaw Pro Home   >  Chapter 6 - Charitable Deduction Methods  >  6.3 Gift Annuities  >  6.3.3 Term-of-Years Annuity  >  Basic Quiz

Basic Quiz - 6.3.3 Term-of-Years Annuity

1. A term-of-years annuity is an annuity created from the outset for a specific term of years.
           
2. A term-of-years annuity can only be created to assist a young person with college expenses.
           
3. Boris created a deferred annuity for Natasha when she was 50 years old to begin payments when she turns 70. Natasha is now 65 and would like to exercise her option to compress the payments over a four-year period. Natasha may do this but it will affect the timing of the taxation on the annuity payments.
           
4. The payments from a term-of-years annuity are taxable to the donor.
           
5. An annuitant must elect the term-of-years option before the annuity starting date or lose the option to do so.
           
6. If an annuitant elects the term-of-years option prior to the annuity starting date, the donor is immediately taxed on the full value of the annuity payments.
           
7. Boris created an annuity with a term-of-years option for Natasha who is 14. The annuity starting date is Natasha's 18th birthday. Natasha's age will result in the imposition of an excise tax of 10% on the payments.
           
8. The total taxes on a term-of-years annuity can be as high as approximately 62%.
           
9. IRS Pub. 1457, Table H is used to adjust the charitable deduction for deferred charitable gift annuities.
           
10. No portion of a deferred charitable gift annuity payment is tax-free.