Question

Calvin reviewed his cancelled checks and receipts this year for charitable contributions, which included an antique painting and IBM stock. He has owned the IBM stock and the painting since 2005.

Donee	Item	Cost		FMV
Hobbs Medical Center	IBM stock	$	7,200	$	44,000
State Museum	Antique painting		6,100		3,660
A needy family	Food and clothes		620		370
United Way	Cash		30,000		30,000

Calculate Calvin's charitable contribution deduction and carryover (if any) under the following circumstances:

a) Calvin’s AGI is $210,000.

b) Calvin’s AGI is $210,000 but the State Museum told Calvin that it plans to sell the painting.

Answer 1

a) Maximum remaining contributions = $60,830

All the contributions are deductible except the donation that is made to the needy family. This donation does not qualify for a charitable contribution because the family is not a qualified charity ( if he would had made a donation of food and clothes to a qualifying organizations, it would have qualified). The IBM stock is a capital gain property. Thus Calvin is allowed to deduct The FMV of the stock ($44,000). This will be subject to a 30% of AGI( i.e. $210,000 * 30% = $63,000). Painting is not a capital gain property as it's value is not appreciated. Thus Calvin can only deduct value of the painting subject to 50% of AGI ceiling ($ 210,000* 50% =$105,000).

Thus Calvin's donations are $60,830 , which does not approach the 50%limit, which is calculated as follows:

50% AGI limit = $105,000

50% contributions - cash = $30,000 * 50% = $15,000

50% contribution for painting = $3,660*50% = $1,830

Total 50% contribution = $16,830

Maximum remaining contribution to reach 50% = $105,000 - $16830 = $88,170

b) The answer is same as in (a) calculated above, as painting is not a capital gain property.