Question

Kelly, who has AGI of $250,000, owns stock in Blue corporation with a basis of $20,000. he donates the stock to a qualified charitable organization on July 5, 2018 A.) what is the amount of Kelley's charitable contribution deduction, assuming that he purchased the stock on March 4, 2018 and the stock had a fair market value of $27,000 when he made the donation> B.) Assume the same facts as in a., except that kelly purchased the sock on August 8, 2016 C.) Assume the same facts as in a., except that the stock had a fair market value of $15,500 (rather than $27,000) when Kelly donated it to the charity.

Answer 1

A.Because kelly didn't have the stock in long term holding period. It is subject to short term capital gain subject to ordinary income property. So the deduction is limited to $20000

B. Since she holds it for a long term period from August 08 2016 to july 5 2018 it is capital gains. So her deduction is equal to fair market value i.e. $27000.

C.The deduction for a contribution of loss property (FMV is less than adjusted basis) is limited to the fair market value. So the deduction available shall be $15500.

Please give a like if satisfied.