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In 2019, Oak Inc. made a charitable donation of $100,000 to the American Red Cross (a...

In 2019, Oak Inc. made a charitable donation of $100,000 to the American Red Cross (a qualifying charity). For the year, Oak reported taxable income of $550,000 which included a $100,000 charitable contribution deduction (before limitation), a $50,000 dividends received deduction and a $10,000 net operating loss carryover from year 2018. What is Oak Inc.’s charitable contribution deduction for 2019?

Description Amount
Taxable Income $550,000
Charitable Contribution
Dividend Received Deduction
NOL Carryover
Revised Taxable Income
Charitable Contribution % Limitation
Charitable Contribution Allowed
Charitable Contribution Carryover
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Answer #1

Calculation of charitable contribution deduction for year 2019

Oak .Inc's charitable contribution deduction = $54000

Maximum charitable contribution deduction = 10% of taxable income before charitable contribution and dividends received deduction. However, NOL carryovers are deducted from taxable income to determine charitable contribution deduction.

Explanation

Amount ($)

Oak .Inc's taxable income for charitable contribution limitation purposes

Reported taxable income - Net operating loss carryover

= $ 550,000 - $10000

540000

.

Oak .Inc's charitable contribution deduction for year 2019

Oak .Inc may deduct up to 10% of taxable income.

= 10% * $540000

.

54000
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