Question

roblem 10-34 (Algorithmic) (LO. 6,8) Lamon had AGI of $177,000 in 2019. He is considering making a charitable contribution this year to the American Heart Association, a qualified charitable organization. Determine the current allowable charitable contribution deduction in each of the following independent situations, and indicate the treatment for any amount that is not deductible currently. Identify any planning ideas to minimize Ramon's tax liability a. A cash gift of $88,500. In the current year, Ramon may deduct $ since his charitable contribution is limited to s b. A gift of Oako stock worth $88,500 on the contribution date. Ramon had acquired the stock as an investment two years ago at a cost of $79,650. The stock's value for determining the contribution is s for The deduction for 2019 is s .The remaining years. c. A gift of a painting worth $88,500 that Ramon purchased three years ago for $79,650. The charity has indicated that it would sell the painting to generate cash to fund medical research The contribution is valued at WWWWWW The amount deductible in the current year is d. Ramon has decided to make a cash gift to the American Heart Association of $123.900. However, he is considering delaying his gift until next year when his at will increase to $300.000 and he will be in the 32 income tax bracket, an increase from his current year Income tax bracket of 24%

Answer 1

a, In the current year , Ramon may deduct $ 88,500 since his charitable contribution is limited to $ 88,500 (50% of AGI)

b. The stock value for determining the contribution is $ 88,500 (market value on the contribution date). The deduction for 2019 is $ 53,100. The remaining $ 35,400 would be deductible @ $ 7,080 for 5 years.

c. The contribution is valued at $ 88,500 (FMV on the contribution date as the painting has been held for more than an year), The amount deductible in the current year is $ 0 (as the intent of the charitable institution is to sell the painting)

d.It would be advisable to delay the the gift contribution until next year as the entire amount of $ 123,900 would qualify as a deductible amount (Max limit 50% of AGI 300,00 = 150,000 in this case). Also, it would result into a lower income tax bracket post the cash gift is made and recorded in books.