Question

Exercise 3-26 (LO. 1) Compute the charitable contribution deduction ignoring the percentage limitation for each of the following corporations a. Amber Corporation donated inventory of clothing (basis of $24,000, fair market value of $30,000) 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 for $55.000

Answer 1

Answer -

		Charitable contribution deduction	Explanation
(a)	Amber Corporation donated inventory of clothing (basis of $24000, fair market value of $30000) to a qualified charitable organization that operates homeless shelters.	$27000	The deduction amount is equal to the lesser of : (1) - The sum of the property's basis plus 50% of the appreciation on the property [$24000 + ($30000 - $24000) * 50%] = $27000 or (2) - Twice the property's basis (2*$24000) = $48000
(b)	Brass Corporation donated stock held as an investment to Western College (a qualified organization). Brass acquired the stock three years ago for $18000, and the fair market value on the date of the contribution is $32000. Western College plans on selling the stock.	$32000	This is a contribution of capital gain property; thus, the deduction amount is the property's fair market value.
(c)	Ruby Corporation donates a sculpture held as an investment and worth $130000 to a local museum (a qualified organization), which exhibits the sculpture. Ruby acquired the sculpture four years ago for $55000.	$130000	This is a contribution of capital gain property; thus, the deduction amount is the property's fair market value.