Prepare a memorandum to your client Phil Nickelson explaining how the federal income tax laws regarding...

Prepare a memorandum to your client Phil Nickelson explaining how the federal income tax laws regarding donations of cash, automobiles, boats, and real estate apply to corporate taxpayers.

Expert Solution

Federal Income Tax Law regarding donation of Cash: For claiming the deduction of cash donation, a receipt from the charitable organization bearing date and amount of donation is required.

Federal Income Tax Law regarding donation of Automobile: For claiming the deduction of automobile donation, a receipt from the charitable organization is required. If the charitable organization immediately sell-off the automobile, the lower of amount realized from sale or the fair market value of automobile can be deducted. Further, if the charitable organization uses the car for its own purpose, the fair market value of car may be claimed as deduction.

Federal Income Tax Law regarding donation of Boats: For claiming the deduction of boat donation, a receipt from the charitable organization is required. The fair market value of the boat (as determined by the marine surveyor) may be claimed as deduction.

Federal Income Tax Law regarding donation of real estate: For claiming a deduction of real estate donation worth more than $5,000, appraisal of the property needs to be done which must be signed by the person who appraises the donation, the charitable organization receiving the donation and by the donor. Further, the appraiser must be an independent person who is not related to the donor. With regard to the limit of deduction, fair market value of the real estate can be claimed as deduction subject to 30% of Adjusted Gross Income.

ekkarill92 answered 1 year ago

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