Question

During the current year, Gray Corporation, a C corporation in the financial services business, made charitable contributions to qualified organizations as follows:

∙

Stock (basis of $20,000, fair market value of $45,000) in Drab Corporation, held for six months as an investment, to the Salvation Army. (Salvation Army plans on selling the stock.)

∙

Painting (basis of $90,000, fair market value of $250,000), held for four years as an investment, to the Museum of Fine Arts. (The Museum plans on including the painting in its collection.)

Gray Corporation’s taxable income (before any charitable contribution deduction) is $1.8 million.

a. What is the total amount of Gray’s charitable contributions for the year?

b.

What is the amount of Gray’s charitable contribution deduction in the current year, and what happens to any excess charitable contribution, if any?

Answer 1

a	The total amount of Gray’s charitable contributions for the year is calculated as follow
	Stock in Drab Corporation donated to Salvation Army	$          45,000	Taken at FMV
	Painting donated to the Museum of Fine Arts.	$        250,000	Taken at FMV
	Total Amount of Gray's Charitable Donations	$        295,000
b	The amount of Gray’s charitable contribution deduction in the current year is	$ 295,000.00
	In Current Year Gray's Charitable Contribution is within the limit of 30% or 50% of AGTI of $1.80 million, but If there had been any excess that could be carried to next five years