petro company donated inventory to hospitals. the basis of the inventory was 70,000 and its fair...

petro company donated inventory to hospitals. the basis of the inventory was 70,000 and its fair market value was 120000. petro made no other cintributions this year. what is the charitable contribution deduction assuming that petry co taxes income before the dividend received deduction and charitable contributions deduction is 600,000 and included in income was a 100000 dividende received from a 15% owned domestic coproation

Expert Solution

“when a company contributes inventory to be used by the donee for the care of the needy, the qualified contribution is reduced by half of the amount of potential ordinary income if property had been sold at its FMV”

Petro Company allowable contribution deduction should not exceed $60000 ($600,000 adjusted taxable income × 10%).

Contributions $120,000
Less: Potential ordinary income if sold [($120,000 FMV - $70,000 basis) × 50%] $25,000

Contribution deduction $95,000

So here, Petro Company can take up to $60,000 as contribution deduction

I hope this will help you. If requires clarification , you may comment below.

ekkarill92 answered 11 months ago

Under current U.S. GAAP, assets that have been donated to a company are recorded at fair...

Under current U.S. GAAP, assets that have been donated to a company are recorded at fair value. By basing your argument on the conceptual framework, argue in favor of the current GAAP treatment for donated assets.

A company presents its accounts for inventory on the LIFO basis. In the questions below, you...

A company presents its accounts for inventory on the LIFO basis. In the questions below, you need to perform the necessary conversions to FIFO to obtain a just comparison with peer companies. The necessary financial information for the company for the year ended 31.December 2019 is presented below: Statement of Financial Position as at 31 December 2019 US $million 2019 2018 Inventories 950 905 Statement of Profit or Loss and Other Comprehensive Income for the year ending 31 December 2019...

What is a fair and just safety culture? What do hospitals need to support a fair...

What is a fair and just safety culture? What do hospitals need to support a fair and just safety culture? Describe now how the Joint commission standards that support a fair and just safety culture.

Blue Company follows the practice of pricing its inventory at LCNRV, on an individual-item basis. Item...

Blue Company follows the practice of pricing its inventory at LCNRV, on an individual-item basis. Item No. Quantity Cost per Unit Estimated Selling Price Cost to Complete and Sell 1320 1,800 $3.90 $5.49 $1.95 1333 1,500 3.29 4.15 1.22 1426 1,400 5.49 6.10 1.71 1437 1,600 4.39 3.90 1.65 1510 1,300 2.75 3.97 1.71 1522 1,100 3.66 4.76 0.98 1573 3,600 2.20 3.05 1.46 1626 1,600 5.73 7.32 1.83 From the information above, determine the amount of Blue Company inventory....

Sheridan Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The...

Sheridan Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2020, consists of products D, E, F, G, H, and I. Relevant per unit data for these products appear below. Item D Item E Item F Item G Item H Item I Estimated selling price $130 $119 $103 $97 $119 $97 Cost 81 86 86 86 54 39 Cost to complete 32 32 27 38 32 32 Selling costs 11...

Ayayai Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The...

Ayayai Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2017, consists of products D, E, F, G, H, and I. Relevant per unit data for these products appear below. Item D Item E Item F Item G Item H Item I Estimated selling price $128 $118 $102 $96 $118 $96 Cost 80 86 86 86 54 39 Cost to complete 32 32 27 37 32 32 Selling costs 11...

Larkspur Company follows the practice of pricing its inventory at LCNRV, on an individual-item basis. Item...

Larkspur Company follows the practice of pricing its inventory at LCNRV, on an individual-item basis. Item No. Quantity Cost per Unit Estimated Selling Price Cost to Complete and Sell 1320 1,300 $4.00 $5.63 $2.00 1333 1,000 3.38 4.25 1.25 1426 900 5.63 6.25 1.75 1437 1,100 4.50 4.00 1.69 1510 800 2.81 4.06 1.75 1522 600 3.75 4.88 1.00 1573 3,100 2.25 3.13 1.50 1626 1,100 5.88 7.50 1.88 From the information above, determine the amount of Larkspur Company inventory....

Flint Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The...

Flint Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2017, consists of products D, E, F, G, H, and I. Relevant per unit data for these products appear below. Item D Item E Item F Item G Item H Item I Estimated selling price $126 $116 $100 $95 $116 $95 Cost 79 84 84 84 53 38 Cost to complete 32 32 26 37 32 32 Selling costs 11...

Liz had an AGI of $130,000 in 2020. She donated Corporation Stock with a basis of...

Liz had an AGI of $130,000 in 2020. She donated Corporation Stock with a basis of $10,000 to a qualified charitable organization on July 5, 2020. A. What is the amount of Liz's deduction assuming that she purchased the stock on December 3, 2019, and the stock had a fair market value of $17,000 when she made the donation? B. Assume the same facts as in part (A) except that Liz purchased the stock on July 1, 2017. C. Assume...

Jorge contributed land he held as an investment (fair market value $117,000; basis $58,750) and inventory...

Jorge contributed land he held as an investment (fair market value $117,000; basis $58,750) and inventory (fair market value $72,500; basis $57,750) to ABC Corporation in exchange for 50 percent of the ABC stock (30 shares valued at $114,000) and $75,500 cash in a qualifying §351 exchange. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.) a-1. What amount of gain does Jorge recognize on the exchange? a-2. What is the character of the gain?...

Question