Question

26. LO.1 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 $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 ago for $55,000

Answer 1

Answer to Question (a):

Charitable Contribution Deduction = $ 27,000

Explanation:

The deduction amount is equal to lessor 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) = $48,000

Answer to Question (b):

Charitable Contribution Deduction = $ 32,000

Explanation:

This is a contribution of capital gain property. Thus, the deduction amount is the property's fair market value.

Answer to Question (c):

Charitable Contribution Deduction = $ 130,000

Explanation:

This is a contribution of capital gain property. Thus, the deduction amount is the property's fair market value.