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An accrual basis corporation wants to make a donation to an IRS approved charity. What is...

An accrual basis corporation wants to make a donation to an IRS approved charity.

  1. What is the most tax efficient type of property the corporation could use to make the donation? Why?

  2. What procedural steps must the corporation take to ensure the contribution will be deductible in the current year? Assume the charity is a valid 501(c)(3) organization.

  3. Assume the amount of the contribution is $25,000 and it is the only contribution made this year and there are no carryforwards. If the corporation’s taxable income before deducting the contribution and the dividend received deduction is $180,000 (and there are no carrybacks to the current year) how much can the corporation deduct?

  4. What if anything happens to the amount that is not deductible?

  5. Assume that the following year the corporation has taxable income of $100,000 before deducting the contribution and the dividends received deduction, and make a current year contribution of $7,000. How much of the current year contribution can the corporation deduct, and what is the total amount of the corporation’s contribution for the year?

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