Question

Problem 7-33 (LO 7-1) (Algo) Ray Ray made the following contributions this year. Charity Property Cost FMV Athens Academy School Cash $ 9,800 $ 9,800 United Way Cash 8,800 8,800 American Heart Association Antique painting 18,050 90,250 First Methodist Church Coca-Cola stock 16,400 24,600 Determine the maximum amount of charitable deduction for each of these contributions ignoring the AGI ceiling on charitable contributions and assuming that the American Heart Association plans to sell the antique painting to fund its operations. Ray Ray has owned the painting and Coca-Cola stock since 1990.

Answer 1

Charitable deductions Charitable donations made to qualified donations are allowed as deduction for tax purposes under itemized deduction from AGI. The amount of charitable deduction is restricted up to certain ceiling or maximum amount. The amount of ceiling allowed as deduction depends on type of property donated, nature of charity who is receiving donation that is private charities or public charities. In case of donation to school and UW in cash the amount is restricted to the total cash donation paid which is $18,600 [ $8,800 + $9,800 ] The donation of antique painting by R would be sold and used for operations of A and thus the amount of donation is restricted to costs of the painting which is $18,050 The donation of stock which is capital gain property due to its appreciation or changes in price the amount of deduction would depend on the FMV of the stock which is $24,600