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Calvin reviewed his cancelled checks and receipts this year for charitable contributions, which included an antique...

Calvin reviewed his cancelled checks and receipts this year for charitable contributions, which included an antique painting and IBM stock. He has owned the IBM stock and the painting since 2005.

Donee Item Cost FMV
Hobbs Medical Center IBM stock $ 5,000 $ 22,000
State Museum Painting 5,000 3,000
A needy family Food and clothes 400 250
United Way Cash 8,000 8,000


Calculate Calvin's charitable contribution deduction and carryover (if any) under the following circumstances. (Leave no answer blank. Enter zero if applicable.)

d. Calvin’s AGI is $100,000 and Hobbs is a nonoperating private foundation.

e. Calvin’s AGI is $100,000 and the painting is worth $10,000.


Solutions

Expert Solution

d. Answer -

Charitable contribution deduction $31000
Carryover $2000

Explanation:

The IBM stock is capital gain property but because the Donee is a private non-operating foundation, the deduction for the value of the stock is subject to a 20% of AGI limitation.

Hence, Calvin can deduct the lesser of

(1) The value of the stock up to the 20% AGI limit ($20000) or

(2) The remaining amount of deduction to reach the 50% limit ($50000 - $3000 - $8000 = $39000)

Hence, Calvin can deduct $31,000 this year consisting of cash of $8,000, painting of $3,000, and the stock of $20000.

The remaining value of the stock $2000 ($22000 - $20000) is carried over to next year subject to the 20% of AGI limit.

e. Answer -

Charitable contribution deduction $38000
Carryover $2000

Explanation:

FMV changes to $10000 property type also change to capital gain property.

So,

The IBM stock is capital gain property and the painting is also capital gain property.

Hence, Calvin can only deduct the value of the stock subject to the lesser of

(1) The value of the stock up to the 30% AGI limit ($100000 * 30% = $30000) or

(2) The remaining amount of deduction to reach the 50% limit. ($50000 - $8000 = $42000)

Hence, Calvin can deduct $38000 this year consisting of cash of $8000, painting and the stock of $30000.

The remaining value of the stock $200

ekkarill92 answered 1 year ago
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