This year Latrell made the following charitable contributions:  DoneePropertyCostFMVJones FoundationIBM stock$15,000$25,000Salvation ArmyClothes2,500500City HospitalCash20,000  Determine the maximum amount of Latrell's charitable deduction assuming the Jones Foundation is a private nonoperating foundation and Latrell's AGI is $100,000 this year. You may assume that the stock and painting have been owned for 10 years.

What will be an ideal response?

The charitable deduction is $40,500 overall.


 DescriptionAmountExplanation
(1)AGI$100,000 
(2)60 percent contributions 20,000Cash contribution
(3)60 percent AGI contribution limit 60,000(1) × 60%
(4)Allowable 60 percent deductions 20,000Lesser of (2) or (3)
(5)50 percent contributions 5,00Clothes
(6)50 percent AGI contribution limit 30,000[(1) × 50%] ? (4)
(7)Allowable 50 percent deductions 5,00Least of (5) or (6)
(8)20 percent contributions 25,000IBM stock
(9)20 percent AGI contribution limit 20,000(1) × 20%
(10)Remaining 50 percent AGI contribution limit 29,500(6) - (7)
(11)Allowable 30 percent deductions 20,000Least of (8), (9), or (10)
 Deductible charitable contributions$40,500(4) + (7) + (11)
 
The clothes are not subject to the 30 percent AGI limit because they are ordinary income property (basis exceeds their value so they are not capital gain property). The IBM stock is long-term capital gain property, but because the donee is a private nonoperating foundation, the deduction for the value of the stock is subject to a 20 percent of AGI limitation. The deduction this year is $40,500, consisting of cash of $20,000, clothes of $500, and IBM stock of $20,000. The remaining value of the stock, $5,000 ($25,000 ? $20,000), is carried over to next year, subject to the 20 percent of AGI limit.

Business

You might also like to view...

What can a manager use a model to do?

A. Understand uncertainty B. Calculate risk C. Change variables D. All of these

View
Business

The doctrine of "moving to the nuisance"

A) Excuses the party creating the nuisance from any liability B) Is inapplicable to residential developments C) Applies only to public nuisances D) None of the above

View
Business

If you want to reduce process flow time, it has been suggested that you can reduce interruptions in the production process.

Answer the following statement true (T) or false (F)

View
Business

In 2017, Liam's filing status is married filing separately. For regular tax purposes, he claims a dependency exemption for himself and three personal exemptions ($16,200 in total). Liam does not itemize deductions; his regular taxable income is $56,000 . What is Liam's 2017 AMT base?

a. $20,100. b. $36,300. c. $42,250. d. $78,550.

View
Business