Question

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:

[The following information applies to the questions displayed below.] 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)?

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)?

Answer 1

• 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