Question

Michele , who has AGI of $125,000, contributes a painting, for which she paid $22,000, to a qualified charitable organization. She has owned the painting for several years and it now has a value of $46,000 at the time of the contribution. The organization sells the painting immediately for $50,000 and informs Michele of the sale. What is the amount of Michele ’s charitable contribution deduction reported on her 2017 Schedule A, assuming she makes no charitable contribution elections?

Answer 1

Answer:

Michele charitable contribution deduction reported on her 2017 Schedule A is $50,000

As the painting is sold immediately after receipt, the selling price received by the charitable organization is the best indicator of fair value.

She makes no charitable contribution elections.

The contribution is to qualified charitable organization; the limit is 50% of AGI which is (50% * $125,000=) $62,500.

As such entire amount of $50,000 may be reported as charitable contribution deduction on her 2017 Schedule A.