Question

In December of each year, Gracie contributes 15% of her gross income to the American Red Cross (a 50% organization). Gracie is in the 33% marginal tax bracket and is considering the following alternatives as charitable contributions for the year:  

a) Cash                                                                                     FMV= $25,000

b) Panther Stock held for 3 years ($30,000 basis)            FMV= $25,000

c) Unimproved land held for 10 months ($20,000 basis) FMV= $25,000

d) Cougar Stock held for 8 years (basis $5,000)                 FMV= $25,000

Which option would be the most advantageous for tax purposes? Why?

(Hint: What would be the amount of the charitable contribution for each of the four options?)

Answer 1

1) Cash	Charitable contribution is $25000
2) Panther stock	Charitable contribution is $30000
3) Unimproved land	Charitable contribution is $25000
4) Coughar stock	Charitable contribution is $25000
For charitable contribution we use FMV and if the basis is
more than FMV than we use basis of the asset.
The most advantageous option is Panther stock held for 3 years
as the chartiable contribution of $30000 is highest among all the options