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




a. Determine the maximum amount of charitable deduction for each of these contributions ignoring the AGI ceiling on charitable contributions.

Answer 1

The maximum charitable deductions for Dean's contributions would be $17,400 for cash to State University, $15,700 for cash to Red Cross, $91,600 for the antique painting to the State History Museum, and $41,000 for the Dell stock to the City Medical Center, assuming the contributions were made to qualified charities and all applicable tax rules are followed.

Step-by-step explanation:

In determining the maximum amount of the charitable deduction for each of Dean's contributions without considering the Adjusted Gross Income (AGI) ceiling on charitable contributions, we can assess each contribution separately:

• Cash to State University: $17,400 (deductible at face value)
• Cash to Red Cross: $15,700 (deductible at face value)
• The antique portrait to the State History Museum has a fair market value (FMV) of $91,600. Since it is a long-term capital gain property (assuming it was held for more than one year) and donated to a public charity, it can generally be deducted at FMV.
• Dell stock to City Medical Center: Since the FMV of $41,000 is less than the cost of $52,000, the deductible amount is the lower FMV of $41,000.

Therefore, the maximum charitable deductions would be $17,400 for the cash donation to State University, $15,700 for the cash donation to Red Cross, $91,600 for the donation of the antique painting, and $41,000 for the stock donated to City Medical Center, assuming all donations were to qualified charities and other tax rules are met.