Question

Ramon had AGI of $154,000 in 2018. He is considering making a charitable contribution this year to the American Heart Association, a qualified charitable organization. Determine the current allowable charitable contribution deduction in each of the following independent situations, and indicate the treatment for any amount that is not deductible currently.

a. A cash gift of $77,000.

In the current year, Ramon may deduct $ 77,000 since his charitable contribution is limited to $ ___

A charitable contribution is defined as a gift made to a qualified organization. The potential charitable contribution deduction is the total of all donations, both money and property, that qualify for the deduction.

b. A gift of OakCo stock worth $77,000 on the contribution date. Ramon had acquired the stock as an investment two years ago at a cost of $69,300.

The stock's value for determining the contribution is $___. The deduction for 2018 is $___. The remaining
$___ can be carried forward  for ___ years.

c. A gift of a painting worth $77,000 that Ramon purchased three years ago for $69,300. The charity has indicated that it would sell the painting to generate cash to fund medical research.

The contribution is valued at $ ___ The amount deductible in the current year is $ ___

d. Ramon has decided to make a cash gift to the American Heart Association of $107,800. However, he is considering delaying his gift until next year when his AGI will increase to $300,000 and he will be in the 32% income tax bracket, an increase from his current-year income tax bracket of 24%.

Assume a 6% discount rate. The present value factors, at a 6% discount rate, are as follows:

Year PV Factor at 6% 1 0.9434 3 0.8396 5 0.7473

If required, round your final answers to the nearest dollar.

Ramon asks you to determine the tax savings from the tax deduction in present value terms if he were to make the gift this year, rather than delaying the gift until next year. For purposes of this analysis, ignore the potential impact of the overall limitation on certain itemized deductions.

Total present value of tax savings from the tax deduction if made this year: $ ___
Total present value of tax savings from the tax deduction if made next year: $ ___

Answer 1

a)

For contributions of cash, other monetary gift (regardless of amount), you must maintain a record of the contribution:

• A bank record or a written communication from the qualified organization containing the name of the organization, the amount, and the date of the contribution.
• In addition to deducting your cash contributions, you generally can deduct the fair market value of any other property you donate to qualified organizations.

Ramon would be eligible for deduction $ 77,000

b) In addition to deducting your cash contributions, you generally can deduct the fair market value of any other property you donate to qualified organizations.

based on the above point ramon can be eligible to deduct fair market value as deduction I.e $77,000

c)In addition to deducting your cash contributions, you generally can deduct the fair market value of any other property you donate to qualified organizations.

based on the above point ramon can be eligible to deduct fair market value as deduction I.e $77,000(Selling Value of Painting)

d) Total present value of tax savings from the tax deduction if made this year: $ 25,872
Total present value of tax savings from the tax deduction if made next year: $ 90,566.4