Question

Markita donated stock that she has held for less than a year to a qualified charitable organization. Her basis in the stock is $1,000 and the fair market value of the stock is $1,200. Which one of the following statements is true regarding Markita's donation?

a. The stock is capital gain property, She will deduct $1,000, since her basis is less than fair market value
b. The stock is ordinary income property. She will deduct $1,200, since a stock donation is valued at fair market value
c. The stock is ordinary income property. She will deduct $1,000, since her basis is less than fair market value
d. The stock is capital gain property. She will deduct $1,200, since capital gain property allowed to be deducted at fair market value

Answer 1

Markita's stock donation can be deducted based on her basis, as discussed in option d.

Step-by-step explanation:

The correct statement regarding Markita's donation is option d. The stock is ordinary income property. She will deduct $1,000, since her basis is less than fair market value.

When stock held for less than a year is donated to a qualified charitable organization, the donor can generally deduct the lesser of the stock's fair market value or its basis. In this case, Markita's basis in the stock is $1,000, which is less than the fair market value of $1,200. Therefore, she can deduct $1,000.