Question

Patrick has an adjusted gross income of $160,000 in the current year. He donated $30,000 cash to a public charity; capital gain property with a basis of $15,000 but a fair market value of $40,000 to a public charity; and publicly traded stock with a basis of $20,000 and a FMV of $35,000 to a private nonoperating foundation. What is deductible as a charitable contribution for the current year?

a. $30,000 in cash to the public charity, $40,000 in property to public charity, and $8,000 in stock to the private non operating foundation
b. $30,000 in cash to the public charity, $48,000 in property to public charity, and $20,000 in stock to the private non operating foundation
c. $30,000 in cash to the public charity, $40,000 in property to public charity, and $32,000 in stock to the private non operating foundation
d. $30,000 in cash to the public charity, $50,000 in property to public charity

Answer 1

Patrick can deduct $30,000 for cash donations to a public charity, $40,000 for capital gain property donated to a public charity, and $20,000 for publicly traded stock donated to a private nonoperating foundation on his taxes.

Step-by-step explanation:

When calculating the deductible amounts for charitable contributions on your income tax, different rules apply to cash donations, capital gain property, and donations to private foundations compared to public charities. In Patrick's situation with an adjusted gross income of $160,000, the deductible amounts are:

• $30,000 in cash to the public charity, because cash contributions to public charities are fully deductible up to certain limits of adjusted gross income, which is generally 60%.
• $40,000 in property (with a $15,000 basis) to a public charity, as the full fair market value of the donated property is deductible when it is to a public charity, again subject to income-based limitations.
• $20,000 in publicly traded stock to a private nonoperating foundation, instead of the stock's fair market value of $35,000. This is because, for private foundations, the deduction is usually limited to the basis of the stock rather than its fair market value unless certain conditions are met.

The correct option that Patrick can deduct as charitable contributions for the current year is b. $30,000 in cash to the public charity, $40,000 in property to public charity, and $20,000 in stock to the private nonoperating foundation.