Maura makes a gift of a van to a local food bank run by a charity. Maura had used the van in her trade or business. The van has a FMV of $6,500; a cost of $31,000; and $27,000 depreciation claimed. What is the amount of Maura's charitable contribution deduction?
A) $6,500
B) $31,000
C) $4,000
D) $2,500
C) $4,000
If the van had been sold for $6,500, the realized and recognized gain would be $2,500 and all of the gain would be ordinary income due to the recapture of depreciation under Sec. 1245. The charitable contribution deduction is limited to $4,000 ($6,500 - $2,500) because none of the $2,500 gain would be taxed as a LTCG if the van was sold.
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