In addition to cash contributions to charity, Dean decided to donate shares of stock and a...

In addition to cash contributions to charity, Dean decided to donate shares of stock and a portrait painted during the earlier part of the last century. Dean purchased the stock and the portrait many years ago as investments. Dean reported the following recipients:

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In addition to cash contributions to charity, Dean decided to donate shares of stock and a portrait painted during the earlier part of the last century. Dean purchased the stock and the portrait many years ago as investments. Dean reported the following recipients:

Charity	Property	Cost		FMV
State University	Cash	$	15,000	$	15,000
Red Cross	Cash		14,500		14,500
State History Museum	Antique painting		5,000		82,000
City Medical Center	Dell stock		28,000		17,000

c. Suppose Dean is a dealer in antique paintings and had held the painting for sale before the contribution. What is Dean's charitable contribution deduction for the painting in this situation (ignoring AGI limitations)?

Expert Solution

Firstly state history museum should be a qualified organization for the purposes of charitable contribution deduction, as it is a United states possession made exclusively for public purposes.

If property other than cash is made to a qualified organisation then generally the fair market value of the property can be considered for calculation of charitable contribution deduction. In this case paintings are inventory for Dean, hence Dean will be able to deduct only the basis of the painting.

Maximum deduction will be -

State university- cash - 50% of $15000 = $7500 (qualifying organisation with 50% benefit)

Red cross- cash - 50% of $14500= $7250 (same reason)

City medical center - 50%- Dell stock is in loss so not capital gain property - so FMV or basis- Lower would be considered- $17000 so 50% of that = $8500

State history museum - 50% of 5000 as explained above i.e. $2500

Deduction	$
State university	7500
Red cross	7250
City medical center	8500
State history museum	2500
Total deduction	$25750

ekkarill92 answered 1 year ago

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