Question

Masoud’s records reflect the following information: 1. Paid $550 dues to a fraternal organization (such as the Elks Club). 2. Donated stock having a fair market value of $6,000 to a qualified charitable organization. He purchased the stock 2 years earlier for $4,500. 3. Paid $2,500 cash to qualified public charitable organizations.

Masoud's adjusted gross income for this year was $50,000. What is the amount of his charitable contribution deduction for the year?

Answer 1

Answer-The amount of deduction is upto 50% adjusted gross income if that amount is donated to charity.The adjusted gross income is $50,000 in this case 50% can be taken as deduction if such amount is donated.

Any amount donated to charities or $25,000 whichever is lower can be considered as deduction.

Transactions	Explanation	Deduction
1.Paid $550 dues to a fraternal organization	This does not come under the charity activities so this is not eligible for deduction.	-
2.Donated stock having a fair market value of $6,000 to a qualified charitable organization.He purchased the stock 2 years earlier for $4,500	It is donated to charity it can be taken as deduction.Dedcution amount will be stock's fair market value	$6,000
3.Paid $2,500 cash to qualified public charitable organizations.	it is a qualified charitable organisation it also allowed as deductions.	$2,500
Total		$8,500

Masoud can take a deduction of $8500.because $8,500 is lower than $25,000 ($50,000*50%)