Question

Marco, a calendar-year taxpayer, made the following charitable contributions in the current year: Cash to the church $5,000 FMV; Unimproved land (with cost basis of $30,000) to the local college $70,000 FMV. The land had been held as an investment by Marco for 5 years. If Marco's AGI is $120,000 and if he wants to maximize his charitable contribution deduction in the current year, what is Marco's maximum allowable charitable contribution deduction for the current year?

A) $35,000

B) $41,000

C) $60,000

D) $75,000

Answer 1

Marco's maximum allowable charitable contribution deduction for the current year woul be $ 41000

Calculation is as below:

Particulars	Total Amount ($)	Allowable amount ($)	Remarks
Cash paid to Church	5000	5000	Cash donated to church is considered first and is fully deductible
Land contribution	70000 (FMV)	36000	Deduction for land is limited to 30% of AGI = 30% X 120000 = 36000
TOTAL		41000	Total allowable contribution should not exceed 50% of AGI = 50% X 120000 = 60000