Question

Gwen Stefani makes the following charitable donations in the current year:

1. Inventory held for resale in Gwen Stefani’s business (a sole proprietorship)

Basis $ 8,000, Market Value $ 7,200

2. Stock in Driskoll, Inc., held as an investment (acquired two years ago)

Basis 16,000, Market Value 40,000

3. Coin collection held as an investment (acquired five years ago)

Basis 4,000, Market Value 20,000

The Driskoll stock and the inventory were given to Gwen Stefani’s church, and the coin collection was given to the Salvation Army. Both donees promptly sold the property for the stated fair market value. Disregarding percentage limitations, Gwen Stefani’s current charitable contribution deduction is:

Answer 1

Deduction for Inventory given = $7,200

Deduction for stock = $40,000 its fair market value

Deduction for coin collection = $4,000 as it is sold by donee immediately (tangilble personal property limit)

Total deduction = $7,200 + $40,000 + $4,000 = $51,200

Please rate.

Notes:

Charitable deductions:

Charitable contributions are allowed as itemized deductions. Amount of deduction is equal to the amount of cash donated and fair market value of property donated. Amount of deduction is sometimes limited. Fair market value of property donated to certain private non-operating foundations is reduced by the amount of potential long-term capital gain.

Fair market value of the property is reduced by the amount of short-term capital gain or ordinary income that could have been realized by the taxpayer if he had sold or exchanged the property on the date of donation. Fair market value of tangible personal property donated to an organization that uses the property for a purpose unrelated to the organization’s primary purpose is reduced by the amount of potential long-term capital gain.