Question

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?

Answer 1

First, we must know if the limit of 30% of AGI is applicable to the three contributions. Based on the information obtained from The Tax Cuts and Jobs Act of 2017.

The cash donations have a 60% limit of AGI depending on the type of organization. In our case United Way is part of those of types of organizations, which are also described on the internal revenue code IRC 501 (c), being classified as IRC § 170(b)(1)(A). It means the cash amount will not be subject to the 30% AGI limit.

On the other hand, the 30% of AGI ceiling applies to the Stock and the Antique Painting because they are considered long-term gain property because of the time the company Ray Ray has owned them (since 1990).

If the donation is property other than cash to a qualified organization; in our case the American Heart Association and First Methodist Church, we deduct the fair market value of the property (FMV).

All above being said, we can proceed to answer the question.

What is the total amount of charitable contributions subject to the 30% of AGI ceiling?

                    

• Pepsi stock             12,855
• Antique painting       7,148
•                                 20,003 total amount of charitable contributions subject to the 30% of AGI ceiling.