Question

Mr. Rich earned a salary of $500,000 (which is his AGI) in 2019. He received $400,000 from a life insurance company due to the death of a close relative. Mr. Rich gave cash of $300,000 to the UNC Charlotte School of Accountancy for student scholarships. What is his charitable contribution deduction for the year?

Group of answer choices $200,000 $250,000 $100,000 $300,000

Answer 1

AGI of Mr Rich = $500,000

The $400,000 received from the life insurance company due to the death of a close relative is exempted and is not included in the AGI.

There is a restriction to the amount of all charitable contributions allowed during a tax year. Your overall charitable deductions are usually limited to no extra than 60% of your adjusted gross income (AGI). However, only donations to certain groups qualify for the highest restrict. These agencies consist of churches, educational institutions, hospitals, and others as defined with the aid of the IRS.

The UNC Charlotte School of Accountancy is an educational institution.

Hense, Charitable contribution deduction for the year = AGI * 60% = 500,000 * 60% = $300,000