Question

-Fatima's records contain the following information:

1.   Donated stock having a fair market value of $4,000 to a qualified charitable organization. She acquired the stock five months previously at a cost of $3,000.

2.   Paid $900 to a church school as a requirement for the enrollment of her son.

3.   Paid $350 for annual homeowner's association dues.

4.   Drove 500 miles in his personal auto. The travel was directly related to volunteer services she performed for her church.

How much can Fatima deduct as a charitable contribution?

A) $2,456

B) $3,070

C) $3,356

D) $4,000

-GarLee Grocery, Inc., a C corporation with high taxable income, donates some of its inventory to the Local Food Bank (a charitable organization) which distributes food to the needy. At the time of the contribution, the FMV of the inventory was $20,000, and GarLee Grocery's basis was $6,000. Lee Grocery will be allowed a charitable contribution deduction of

A) $8,000.

B) $12,000.

C) $13,000.

D) $20,000.

-For non-cash charitable donations, an appraisal will be required for donations valued at more than

A) $250.

B) $500.

C) $5,000.

D) $50,000.

-Henry’s adjusted gross income is $50,000 in 2018. He donated a piece of artwork with a basis of $10,000 and a fair market value (FMV) of $25,000. He has owned the artwork for 10 years. The charity that Henry donated the artwork to is a public charity and will display the art work in its art center. What is the maximum charitable deduction in 2018 that Henry can take?

$0.

$10,000.

$15,000.

$25,000.

Answer 1

Answer 1:

Part D: $ 4,000

-Donating stock to a qualified charitable organization is allowed deduction equal to the Fair Market Value ot the Stock as on the date of transfer i.e. Fatima will get a deduction of $ 4,000.

-Paying $ 900 to a church school as a requirement for the enrollment of her son is not allowed as deduction as this payment has been made in her personal capacity.

-$ 350 for annual homeowner's association dues are not accounted as Charitable work. Therefore not allowed as Charitable deduction.

-Driving 500 miles in personal auto has no monetary value mentioned regarding Fuel Prices/Average Run or any other data to convert the same into monetray value. Moreover expenses for driving the personal auto can not be bifurcated as such. Hence avoided for charitable deductions.

Answer 2:

Part D : $ 20,000 is the right answer.

Fair Market Value of the inventory, which is in fine condition to use, is taken for the purpose of deduction.

Answer 3:

Part C: $ 5,000.

Generally a qualified appraisal is required for donations valued at more than $ 5,000. There are few exceptions where appraisal is required if value of items increases $500 but not in general.

Answer 4:

Part D: $ 25,000 is the right answer.

Henry can take charitable deduction of $ 25,000 in 2018 as the fair market value (FMV) on the date of charity is considered in case of assets.