Georgia had AGI of $100,000 in 2017 . She donated Heron Corporation stock with a basis of $8,500 to a qualified charitable organization on July 5, 2017
a. What is the amount of Georgia's deduction, assuming that she purchased the stock on December 4, 2016, and the stock had a fair market value of $15,000 when she made the donation?
b. Assume the same facts as in a., except that Georgia purchased the stock on July 1, 2009.
c. Assume the same facts as in a., except that the stock had a fair market value of $6,000 (rather than $15,000) when Georgia donated it to the charity.
General discussion. The deduction for a contribution of capital gain property is based on the fair market value, while the deduction for a contribution of ordinary income property is equal to the lesser of the basis or the fair market value.
a. Because Georgia did not hold the stock for the long-term holding period (December 4, 2016 - July 5, 2017), it is short-term capital gain property that is subject to the rules for ordinary income property. Therefore, her deduction is limited to $8,500.
b. Georgia held the stock for the long-term holding period (July 1, 2009 - July 5, 2017); so it is capital gain property. Therefore, her deduction is equal to the fair market value of the stock, $15,000.
c. The deduction for a contribution of loss property (FMV is less than adjusted basis) is limited to the fair market value. Therefore, Georgia's deduction is $6,000.
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