Question

In: Accounting

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

16.

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 portrait many years ago as investments. Dean reported the following recipients:

Charity	Property	Cost		FMV
State University	Cash	$	16,000	$	16,000
Red Cross	Cash		15,000		15,000
State History Museum	Painting		5,100		86,000
City Medical Center	Dell stock		38,000		27,000

b. Assume that Dean’s AGI this year is $200,000. Determine Dean’s itemized deduction for his charitable contributions this year and any carryover.

Deduction:

Carryover:

Expert Solution

a. The maximum amount:

Cash contributions - $31,000 (16000+15000)

Property donations - $113,000. Deduction for property is Fair Market Value (FMV) if the property is long-term capital gain property and either intangible (the stock) or related to the charity’s exempt function. Hence, the value of the antique is deductible.

Stock – $27,000 (FMV) - Because the stock has declined in value it is not considered to be capital gain property. Deduction for this donation is the lesser of FMV or basis.

b. Dean has contributed to public charities and he can deduct all of his cash contributions and the value of the stock because the total does not exceed the 50 % AGI limit. Stock is subject to the 50% of AGI limit and not 30% AGI limit because it is ordinary income due to the fact its basis exceeds its value. Thus, Dean can deduct the lesser of

1. Value of the antique up to the 30% AGI limit ($60,000)

200000*30%

2. Remaining amount of deduction to reach the 50% limit ($28,500 calculated below).

Hence, Dean can deduct $100,000 this year consisting of cash of $31000,stock of $27,000, and the antique of $42000. The remaining value of the antique$44000 ($86,000 - $42000) is carried over to next year subject to the 30% of AGI limit.

50% AGI limit $ 100,000

50% Contributions - cash $ 31000

50% Contributions – Stock + 27000

Total 50% contributions - 58000

Maximum remaining contribution to reach 50% - $42000

ekkarill92 answered 1 year ago

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: [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...

Ray Ray made the following contributions this year. Charity Property Cost FMV United Way Cash 8,930...

Ray Ray made the following contributions this year. Charity Property Cost FMV United Way Cash 8,930 8,930 American Heart Association Pepsi stock 11,249 12,855 First Methodist Church Antique painting 2,301 7,148 American Heart Association plans to sell the stock to fund its operations. First Methodist Church intends to sell the antique painting. Ray Ray has owned the painting and Coca-Cola stock since 1990. What is the total amount of charitable contributions subject to the 30% of AGI ceiling?

16) A corporation issues 3,450 shares of common stock for $110,400. The stock has a stated...

16) A corporation issues 3,450 shares of common stock for $110,400. The stock has a stated value of $19 per share. What amount of credit to Common Stock would the journal entry to record the stock issuance include? Select the correct answer. a) $44,850 b) $65,550 c) $110,400 d) $3,450 18) Hurd Company acquired a building valued at $162,000 for property tax purposes in exchange for 10,000 shares of its $5 par common stock. The stock is widely traded and...

Philip C. Company has 400,000 shares common stock outstanding. In addition, Philip also had 100,000 shares...

Philip C. Company has 400,000 shares common stock outstanding. In addition, Philip also had 100,000 shares of $100 par 5% convertible preferred stock. Each share of preferred stock can be converted into 2 shares of common stock. Net income for the year was $2,000,000 and the tax rate is 30%. Basic EPS ____________________ Fully-Diluted EPS __________________

An investment bank agrees to underwrite an issue of 16 million shares of stock for Looney...

An investment bank agrees to underwrite an issue of 16 million shares of stock for Looney Landscaping Corp. a. The investment bank underwrites the stock on a firm commitment basis, and agrees to pay $15.00 per share to Looney Landscaping Corp. for the 16 million shares of stock. The investment bank then sells those shares to the public for $16.00 per share. How much money does Looney Landscaping Corp. receive? What is the profit to the investment bank? If the...

Ferry Corporation had 300,000 shares of common stock outstanding at December 31, 2020. In addition, it...

Ferry Corporation had 300,000 shares of common stock outstanding at December 31, 2020. In addition, it had 90,000 stock options outstanding, which had been granted to certain executives on June 30, 2020, and which gave them the right to purchase shares of Ferry's stock at an option price of $35 per share. The average market price of Ferry's common stock for 2020 was $50. Net income was $1,000,000. SHOW ALL COMPUTATIONS> Compute EPS. Compute DEPS.

Ferry Corporation had 300,000 shares of common stock outstanding at December 31, 2020. In addition,...

Ferry Corporation had 300,000 shares of common stock outstanding at December 31, 2020. In addition, it had 90,000 stock options outstanding, which had been granted to certain executives on June 30, 2020, and which gave them the right to purchase shares of Ferry's stock at an option price of $35 per share. The average market price of Ferry's common stock for 2020 was $50. Net income was $1,000,000. SHOW ALL COMPUTATIONS> Compute EPS. Compute DEPS.

Wildhorse Corporation has 350,000 shares of common stock outstanding throughout 2021. In addition, the corporation has...

Wildhorse Corporation has 350,000 shares of common stock outstanding throughout 2021. In addition, the corporation has 4,800, 20-year, 8% bonds issued at par in 2019. Each $1,000 bond is convertible into 20 shares of common stock after 9/23/22. During the year 2021, the corporation earned $742,000 after deducting all expenses. The tax rate was 30%. Compute the proper earnings per share for 2021. (Round answer to 2 decimal places, 52.75.)

Apple recently had a stock split, so I decided to buy a few shares of Apple...

Apple recently had a stock split, so I decided to buy a few shares of Apple stock. As of today, Apple's beta is 1.28, the treasury yield is around 1.42%, and the market risk premium is 5.6% (Rudden, 2020). What is my expected return on Apple stock? Please explain your work. Economic State Probability Sony McDonald's Recession 50% 5% 6.00% Normal 30% 7.69% 5.28% Expansion 20% 15% 5.80%

On 7/1/16, ABC purchased 4,000 shares of its own stock from existing stockholders as treasury stock....

On 7/1/16, ABC purchased 4,000 shares of its own stock from existing stockholders as treasury stock. The cost of the treasury stock was $5 per share, or $20,000 in total. The effects of this transaction are already shown in the unadjusted trial balance. On 12/31/16, ABC reissued 2,000 shares of the treasury stock at $8 per share. Record the journal entry required for the reissuance of the treasury stock. To refresh your memory, treasury stock is usually accounted for at...