Question

Charlie Brown, who has AGI of $105,000, owns stock in Peanuts Corporation with a basis of $17,600. He donates the stock to a qualified charitable organization on December 11, 2019. What is the amount of Charlie Brown’s charitable contribution deduction on his 2019 Schedule A, assuming that he purchased the stock on May 30, 2019, and the stock had a fair market value of $24,150 when he made the donation, and assuming that he makes no charitable contribution elections?

b. Linus, who has AGI of $212,000, owns stock in Schultz Corporation with a basis of $58,000. He donates the stock to a qualified charitable organization on June 28, 2019. What is the amount of Linus’ charitable contribution deduction on his 2019 Schedule A, if he purchased the stock on August 16, 2013, and the stock had a fair market value of $72,250 when he made the donation, and if he makes no charitable contribution elections?

c. Lucy, who has AGI of $105,000, contributes a Picasso painting, for which she paid $22,500, to the United Way, a qualified charitable organization. She has owned the painting for several years and it now has a value of $61,000 at the time of the contribution. The United Way sells the painting immediately for $80,000 and informs Lucy of the sale. What is the amount of Lucy’s charitable contribution deduction reported on her 2019 Schedule A, assuming she makes no charitable contribution elections?

Answer 1

For charitable contributions in property, lower of tax basis or FMV shall be deductible.

However, for non business investment or long term capital gains property held for more than a year, FMV of the property is deducted.

Maximum contribution allowed is 60% of the AGI.

However for long term property the limit is 30%.

Required a

Since the property contributed is short-term property, the amount of deduction would be lower of basis or FMV = $17,600

Since this amount is within the limits of 60% of AGI, the deduction allowed would be $ 17,600.

Required b

Since the property contributed is a long term property, the amount of deduction would be FMV of the property contributed = $ 72,250.

However the maximum deduction allowed would be 30% of AGI = 212,000 * 30% = 63,600

The deduction allowed would be $63,600

Required c

Since the property contributed is a non business investment, the amount of deduction would be FMV of the property contributed = 61,000

Maximum allowable contribution is = 60% of 105,000 = 63,000

Since the amount contributed is within the limits, the deductible amount would be $61,000

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