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Ellen donated $30,000 to the First Episcopalian Church in her hometown. She also gave $10,000 in...

Ellen donated $30,000 to the First Episcopalian Church in her hometown. She also gave $10,000 in cash to the United Way. Ellen's AGI is $70,000. What is her allowable itemizable charitable deduction for this year?

Group of answer choices

$30,000

$42,000

$40,000

$21,000

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Homework Answers

Answer #1

The correct option is • $40000

Explanation:

Given:

Ellen's Adjusted Gross Income(AGI) = $70000

Contributions made during the year = $30000 + $10000 = $40000

As per tax rules,

Any cash contribution made during the year is allowed as an deduction to the extent of 60% of AGI. This is only for cash contributions.

Here, total cash contributions made during the year is $40000 which does not exceed the limit of 60% of AGI, i.e., $42000 ($70000×60%).

Therefore,

The allowable itemized charitable deduction is $40000.

_____×_____

Let me know if you have any queries, Happy to assist you.

Kindly upvote, All the best,

HAPPY CHEGGING.

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