Question

Diana made a charitable contribution to his church in the current year. She donated common stock valued at $30,950 (acquired as an investment in 2005 for $15,000). Diana's AGI in the current year is $79,000.

Required:

1. What is his allowable charitable contribution deduction?

       b. How are any excess amounts treated?

Answer 1

Charitable deduction allowed is upto 60% of AGI ( for individual )

Deduction amount will be computed as follows -

• If property contributed - lesser of FMV or tax basis
• If cash - full amount paid

a)

Now, as Diana has contributed to church (allowed) common stock FMV $30,950 with tax basis of $15,000 for charitable deduction lesser of the two i.e. tax basisi = $15,000 will be considered.

But, deduction will be allowed only to the extent of 60% of AGI = $79,000 x 60% =  $47,400.

Hence allowable charitable deduction = $15,000.

b)

Any excess amount not allowed as a charitable deduction in this year may be carried forward upto 5 years (for Individual ).

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