Question

Donna donates stock in Chipper Corporation to the American Red Cross on September 10, 2020. She purchased the stock for $25,025 on December 28, 2019, and it had a fair market value of $35,750 when she made the donation.

a. What is Donna's charitable contribution deduction?The stock is treated as -------- property and Donna's charitable contribution deduction is -------
b. Assume instead that the stock had a fair market value of $21,450 (rather than $35,750) when it was donated to the American Red Cross. What is Donna's charitable contribution deduction?

Answer 1

Donna's charitable contribution deduction is based on the fair market value of the stock at the time of the donation.

Step-by-step explanation:

a. Donna's stock donation to the American Red Cross is a charitable contribution.

The stock is treated as long-term capital gain property because she held it for over a year before donating it.

Her charitable contribution deduction is equal to the fair market value of the stock on the date of the donation, which is $35,750.

b. If the stock had a fair market value of $21,450 instead, Donna's charitable contribution deduction would be $21,450.