Question

Arthur transfers property valued at $250,000 to a charitable organization in return for a single life annuity based on his life valued at $130,000. Arthur's adjusted basis in the transferred property was 595,000. Arthur died two years after the transaction and at the time of his death, the property had a fair market value of $325,000. At the time of the initial transfer, what was Arthur's charitable income tax deduction (ignoring any AGI limitations)? O A $75.000 OB. 5120.000 O c $155.000 O $250.000

Answer 1

Solution: 120,000

Explanation: At the time of the initial transfer, the charitable income tax deduction for Arthur would be value of the property at time of transfer minus single life annuity thus 250,000 - 130,000 = 120,000