Which of the following statements is correct about the AGI limitation? A. Only contributions to certain...

Which of the following statements is correct about the AGI limitation? A. Only contributions to certain organizations qualify for the 50% AGI limitation. B. The contribution of a patent by the inventor is subject to the 30% AGI limitation. C. The fair market value of land given to a university is subject to the 20% AGI limitation. D. The fair market value of publicly traded long-term gain stock given to a charitable organization can be fully deducted under the 50% AGI limitation

Expert Solution

Answer

The fair market value of publicly traded long-term gain stock given to a charitable organization can be fully deducted under the 50% AGI limitation. is right option.

Explanation for each point below:

A.

You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions. Generally, you may deduct up to 50 percent of your adjusted gross income, but 20 percent and 30 percent limitations apply in some cases. Exempt Organizations Select Check uses deductibility status codes to identify these limitations.

B.

A patent held more than one year is subject to the 30%-of-adjusted-gross-income limitation on deductibility (with a 5-year carryover of any excess) when given to charity.

There is a silver lining inside this cloud. Donors of patents may elect to take additional deductions for royalty income earned by the charitable donee in the years following the gift. The deductible amount decreases on a sliding scale; 100% of the charity's income is deductible in the first two years, declining gradually thereafter.

C.

Contributions of capital gain property to non-50% charities, to the extent of the lesser of (1) 20% of AGI; (2) 30% of AGI less contributions subject to the 30% limit; (3) 30% of AGI less contributions of capital gain property to 50% charities; or (4) 50% of AGI less the total of contributions to 50% limit organizations and contributions subject to the 30% limit.

D.

If the stock has increased in value from the time of purchase, the owner can avoid paying the capital gains tax by donating the security to another party. When the security is being donated to a charitable organization, the total amount will still be eligible for a tax deduction.

ekkarill92 answered 1 year ago

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