Question

Henry’s adjusted gross income is $50,000 in 2018. He donated a piece of artwork with a basis of $10,000 and a fair market value (FMV) of $25,000. He has owned the artwork for 10 years. The charity that Henry donated the artwork to is a public charity and will display the art work in its art center. What is the maximum charitable deduction in 2018 that Henry can take?

$0.

$10,000.

$15,000.

$25,000

Answer 1

As per the rules laid in Publication 526, Charitable Contribution and Publication 561
with regard to the determination of of Value of donated property with considering the rules
and disclosure requirment of publication 1771
Deduction is allowed for a charitable contribution made to , or for the use of by way of cash or
any another form, to the public organisations and as laid under Section 170 (C ) of
Internal Revenue Code - deductions upto 50% of adjusted gross total income is allowed.
With regard to other organisation the deductions upto 20 % or 30 %
with limitations may apply.
In the present case, the art work is donated to a public charity and hence 50% of adjusted gross total
income is allowed as deduction
Therefore , maximum chartiable deduction in 2018 that
Henry can take = Adjusted gross income x 50 % = $50000 x 50%=$25000