Question

In addition to cash contributions to charity, Dean decided to donate shares of stock and a portrait painted during the earlier part of the last century. Dean purchased the stock and the portrait many years ago as investments. Dean reported the following recipients:

Charity Property Cost FMV
State University Cash $ 17,400 $ 17,400
Red Cross Cash 15,700 15,700
State History Museum Antique painting 5,240 91,600
City Medical Center Dell stock 52,000 41,000






d. Suppose that Dean's objective with the donation to the museum was to finance expansion of the historical collection. Hence, Dean was not surprised when the museum announced the sale of the painting because of its limited historical value. What is Dean's charitable contribution deduction for the painting in this situation (ignoring AGI limitations)?

Answer 1

Dean's charitable contribution deduction for the painting in this situation would be limited to his adjusted cost basis of $5,240.

Step-by-step explanation:

Dean's charitable contribution deduction for the painting would be based on the fair market value (FMV) of the painting at the time of the donation. In this situation, the FMV of the painting is $91,600. However, since the museum announced the sale of the painting due to its limited historical value, the deduction would be limited to Dean's adjusted cost basis of $5,240.