Question

Lilly had AGI of $240,000 in 2018. She donated SnapCo corporate stock with a basis of...

Lilly had AGI of $240,000 in 2018. She donated SnapCo corporate stock with a basis of $50,000 to a qualified private nonoperating foundation on September 30, 2018.

a. What is the amount of Lilly's deduction assuming that she purchased the stock on November 11, 2017, and the stock had a fair market value of $45,000 when she made the donation?
Lilly's deduction is___?


b. Assuming that she purchased the stock on July 23, 2017, 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, 2017, and the stock had a fair market value of $54,000 when she made the donation to the charity, Lilly's deduction is $____?

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Answer #1

Amount of deductions for lily

a) Amount of deduction shall be $45,000 as it is less than basis price which is $50.000.

b) In case there's long term capital gain in stocks fair market value i.e $64,000 shall be taken as deduction and there's no need to deduct the fair market value to the extent of long term capital gain.

c) In case short term capital gain in stocks deduction shall be fair value of share after deducting short term capital, i.e. $50,000($54,000 - $4,000), however short term capital gain is included in gross income. In the given case it is assumed that short term capital gain not included in gross income hence deduction is $50,000.

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