Question

Lilly had AGI of $240,000 in 2019. She donated SnapCo corporate stock with a basis of $50,000 to a qualified private nonoperating foundation on September 30, 2019.

a. What is the amount of Lilly's deduction assuming that she purchased the stock on November 11, 2018, and the stock had a fair market value of $45,000 when she made the donation? Lilly's deduction is $ 45,000 .

b. Assuming that she purchased the stock on July 23, 2018, and the stock had a fair market value of $62,000 when she made the donation, Lilly's deduction is $ ___________________ .

c. Assuming that she purchased the stock on November 11, 2018, and the stock had a fair market value of $54,000 when she made the donation to the charity, Lilly's deduction is $ 50,000 .

Answer 1

Ans:- (a) In this case Lilys Deduction will be $45000. Since its a short term capital gain, because the holding period of the stock is from Nov 11 2018 to Sep 30, 2019, which is less than a year and therefore in short term capital gain deductions are restricted to lesser of the basis value or market fair value. so, in this case, the basis value is $50000 and fair market value is $45000. Therefore in this case deductions will be $45000.

Ans:-(b) In this case the deductions will be $62000. Since its a long term capital gain because the holding period of the stock is from 23 july 2018 to 30 sep 2019 which is more than a year therefore in long term capital gain deductions are restricted to the fair market value. Therefore, in this case, the deduction will be $62000.

Ans:-(c) In this case Lily's Deduction will be $50000. Since its a Short term capital gain, because the holding period of the stock is from Nov 11, 2018, to Sep 30, 2019, which is less than a year therefore in short term capital gain deductions are restricted to lesser of the fair market value or basis value. so in this case basis price is $50000 and fair market value is $54000. Therefore, in this case, the deduction will be $50000.

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