Question

Compute the charitable contribution deduction (ignoring the percentage limitation) for each of the following C corporations.

a. Amber Corporation donated inventory of clothing (basis of $24,000, fair market value of S30,000) to a qualified charitable organization that operates homeless shelters.

b. Brass Corporation donated stock held as an investment to Western College (a qualified organization). Brass acquired the stock three years ago for $18,000, and the fair market value on the date of the contribution is $32,000. Western College plans on selling the stock.

c. Ruby Corporation donates a sculpture held as an investment and worth $130,000 to a local museum (a qualified organization), which exhibits the sculpture. Ruby acquired the sculpture four years ago for $55,000.

Answer 1

Answer:

a)$27,000

b)$32,000

c)$130,000

Explanation:

a) In case of business inventory donation,the charitable contribution deduction will be lesser of:

i) Basic × 2 = (24,000×2)= 48,000

ii) Basic +(FMV-Basic)× 50% = (24,000) +(30,000 -24,000)×50%= $27,000

It is standardized.No further explanation require

b)Since intangible property gets the FMV(Fair Market Value).Stock is considered capital gain or investment property,Therefore value at FMV.

It is standardized, no further explanation required.

c)since it is a capital gain or investment property.Therefore value at FMV,

It is standardized no further explanation required