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Ramon had AGI of $180,000 in 2018. He is considering making a charitable contribution this year...

Ramon had AGI of $180,000 in 2018. He is considering making a charitable contribution this year to the American Heart Association, a qualified charitable organization. Determine the current allowable charitable contribution deduction in each of the following independent situations, and indicate the treatment for any amount that is not deductible currently.

a. A cash gift of $95,000.

In the current year, Ramon may deduct $ 95,000 since his charitable contribution is limited to $ _________

c. A gift of a painting worth $95,000 that Ramon purchased three years ago for $60,000. The charity has indicated that it would sell the painting to generate cash to fund medical research.

The contribution is valued at $60,000. The amount deductible in the current year is $ ______

d. Ramon has decided to make a cash gift to the American Heart Association of $113,000. However, he is considering delaying his gift until next year when his AGI will increase to $300,000 and he will be in the 32% income tax bracket, an increase from his current-year income tax bracket of 24%

Solutions

Expert Solution

a. In the current year, Ramon may deduct $ 95,000 since his charitable contribution is limited to $ 108000.

Explanation:

According to the new provisions under the act, limit for cash only donation is equal to 60% of AGI. Since Roman's AGI is $ 180000, His charitable contribution limit is 60% of 180000 i.e. $108000.

c. A gift of a painting worth $95,000 that Ramon purchased three years ago for $60,000. The charity has indicated that it would sell the painting to generate cash to fund medical research.

The contribution is valued at $60,000. The amount deductible in the current year is $ 90,000.

Explanation:

According to the new provisions under the act, limit for kind donation is equal to 50% of AGI. Since Roman's AGI is $ 180000, His charitable contribution limit is 50% of 180000 i.e. $90000.However, deduction is equal to fair market value of asset, which is $ 95000 but limited to $ 90,000

d. Nothing will be allowed in current year, because charitable contribution will be made in next year only.

ekkarill92 answered 2 years ago
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