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GiftLaw Pro Home   >  Chapter 4 - Specific Property Gifts  >  4.8 Partnerships and LLCs  >  4.8.2 Lease Option  >  Basic Quiz

Basic Quiz - 4.8.2 Lease Option

1. Active trade or business income to a CRT will not cause the CRT to lose its tax-exempt status.
           
2. If an LLC operates an active trade or business, there are no opportunities to use a charitable remainder trust.
           
3. There are certain businesses that an LLC can engage in that would not produce "active trade or business income."
           
4. Certain types of income are deemed to be passive income.
           
5. CRTs are subject to some of the private foundation rules.
           
6. If LLC units or partnership shares are transferred to a CRT, the trustee can sell those assets to anyone so long as the sale is for fair market value.
           
7. If an LLC or partnership operates an active trade or business, the partnership or LLC can lease the business to an unrelated third party before transferring units or shares to a CRT to avoid the 100% excise tax on the UBTI.
           
8. If the lease option is used before transferring the LLC assets into a CRT, it is recommended that the lease be for a long term just in case the assets do not sell immediately.
           
9. If an LLC or partnership operates a business that deals solely in rental properties the lease option is usually not necessary.
           
10. If the lease option is used with a CRT, the lease should be executed after the partnership shares or LLC units are placed into the CRT.