Question

In December each year, Eleanor Young contributes 10% of her gross income to the United Way (a 50% organization). Eleanor, who is in the 24% marginal tax bracket, is considering the following alternatives for satisfying the contribution.

	Fair Market Value
(1) Cash donation	$140,200
(2) Unimproved land held for six years ($21,030 basis)	$140,200
(3) Blue Corporation stock held for eight months ($21,030 basis)	$140,200
(4) Gold Corporation stock held for two years ($168,240 basis)	$140,200

Eleanor has asked you to help her decide which of the potential contributions listed above will be most tax advantageous. Evaluate the four alternatives and complete a letter to Eleanor.

Determine the amount of the charitable contribution for each option.

	Charitable Contribution
Cash donation	$
Unimproved land held for six years ($21,030 basis)	$
Blue Corporation stock held for eight months ($21,030 basis)	$
Gold Corporation stock held for two years ($168,240 basis)	$

Answer 1

		Charitable Contribution
1	Cash donation	$140,200
2	Unimproved land held for six years ($21,030 basis)	$140,200
3	Blue Corporation stock held for eight months ($21,030 basis)	$21,030
4	Gold Corporation stock held for two years ($168,240 basis)	$140,200

Donation of the Blue Corporation stock is limited to the amount of its basis.

In case of Gold stock, direct contribution is not advisable as it will not allow deduction of $28040 decline in value. It is advisable to sell the stock and donate the proceeds of it.