Question

Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations during 2018:

                                                                                                            Fair

                                                                                                       Market

                                                                                          Basis       Value

Cash donation to State University                               $30,000   $ 30,000

Unimproved land to the City of Terre Haute, Indiana   70,000    310,000

The land had been held by Karen as an investment and was acquired 4 years ago. Shortly after receipt, the City of Terre Haute sold the land for $310,000. Karen’s AGI is $950,000. Before taking into account any phase-down of itemized deductions, the allowable charitable contribution deduction 2018 is:

a.         $100,000.

b.         $165,000.

c.         $225,000.

d.         $340,000.

e.         $315,000.

Answer 1

If you donate property other than cash to a qualified organization, you may generally deduct the fair market value of the property

You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions. Generally, you may deduct up to 50 percent of your adjusted gross income

SO TOTAL DEDUCTION = CASH DONATION + FAIR MARKET VAUE OF PROPERTY

TOTAL DEDUCTION = 30000+310000

TOTAL DEDUCTION =340000

TOTAL DEDUCTION CAN BE CLAIMED MAXIMUM UPTO 50% ADJUSTED TOTAL INCOME

ADJUSTED TOTAL INCOME = 950000*50%

ADJUSTED TOTAL INCOME = 475000

SO TOTAL DEDUCTION ALLOWED IS 340000

SO OPTION D $340000 IS CORRECT