In the current year, Crow Corporation, a C corporation, donated scientific property (basis of $30,000, fair market value of $50,000) to State University, a qualified charitable organization, to be used in research. Crow had held the property for four months as inventory. Crow Corporation may deduct $50,000 for the charitable contribution (ignoring the taxable income limitation).
Answer the following statement true (T) or false (F)
False
Rationale: The scientific property is ordinary income property but it qualifies for the increased deduction amount available for certain corporate contributions of inventory. As such, the amount of the deduction is equal to the lesser of (1) the sum of the inventory’s basis plus 50% of the appreciation on the property [$40,000 = $30,000 + 50%($50,000 – $30,000)] or (2) twice the basis [$60,000 = $30,000 × 2]. In this case, the ceiling does not apply, and the deduction amount is $40,000.
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