Question

Joe,who is in the 32% tax bracket this year, expects to retire next year and be in the 22% tax bracket. He plans to donate $50,000 to his church. Because, he will not have the cash available until next year, Joe donates land (long term capital gain property) with a basis of $10,000 and fair market value of $50,000 to the charch in December of the current year. He requires the land for $50,000 in February of the next year. Discuss Joe's tax objectives and all tax issues related to his actions.

Answer 1

Joe made a donation of land to church.

If this transaction meets the criteria for donnation deduction than he will get tax benefit of 50,000.

Other than that Joe has not affected his tax obligations by this transaction.

And if criteria is not met than this will be gift income of Church & church will have to pay taxes on it. But Joe doesn't concern here for any tax obligations.

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