Question

In addition to cash contributions to charity, Dean decided to donate shares of stock and a portrait painted during the earlier part of the last century. Dean purchased the stock and the portrait many years ago as investments. Dean reported the following recipients:

Charity	Property	Cost		FMV
State University	Cash	$	16,800	$	16,800
Red Cross	Cash		15,400		15,400
State History Museum	Antique painting		5,180		89,200
City Medical Center	Dell stock		46,000		35,000

a. Determine the maximum amount of charitable deduction for each of these contributions ignoring the AGI ceiling on charitable contributions.

b. Suppose Dean is a dealer in antique paintings, and he held the painting for sale before the contribution. What is Dean's charitable contribution deduction for the painting in this situation (ignoring AGI limitations)?

c. Suppose that Dean’s objective with the donation to the museum was to finance expansion of the historical collection. Hence, Dean was not surprised when the museum announced the sale of the painting because of its limited historical value. What is Dean’s charitable contribution deduction for the painting in this situation (ignoring AGI limitations)?

Answer 1

Solution:

a) Maximum amount of charitable deduction

Cash = 16,800 + 15,400 =32,200

Painting = 89,200 (fair market value in case of property)

Stock = 35,000 (Fiar maarket value in case of property)

b)

Charitable contribution for painting =$5,180 (cost)

If the taxpayer is an antique dealer, the antique painting income is treated as an ordinary income. Thus, the painting is no longer a capital gain property, and is subject to the 50 percent of AGI limit and no the 30 percent AGI limit.

c)

Charitable contribution for painting =$5,180 (cost)

If the antique is used fo rthe purpose unrelated to the museum's charitable purpose, the antique painting income is treated as an ordinary income. Thus, the painting is no longer a capital gain property, and is subject to the 50 percent of AGI limit and not the 30 percent AGI limit

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