Question

Armando has AGI of $80,000 and makes the following charitable contributions:

⋅ $10,000 cash to American Heart Society
⋅ $18,000 cash to Redemption Church
⋅ $24,000 worth of AOL stock acquired in 2005 with a basis of $10,000 to Upper State University

What is Armando's maximum charitable deduction in the current year?

Answer 1

Armando can deduct a total of $52,000 in charitable contributions for the current year, which includes $28,000 in cash contributions and a $24,000 stock contribution, respecting the 60% AGI limit for cash and 30% AGI limit for capital gains property.

Step-by-step explanation:

Armando's maximum charitable deduction for cash contributions to public charities is limited to 60% of his adjusted gross income (AGI), per the Tax Cuts and Jobs Act of 2017 and subsequent IRS regulations. Since his AGI is $80,000, he can deduct up to $48,000 (60% of $80,000) in cash contributions. Adding up his cash contributions, $10,000 to the American Heart Society and $18,000 to Redemption Church, we have a total cash contribution of $28,000. The contribution of AOL stock worth $24,000 falls under a different limit—30% of AGI for capital gains property donated to a public charity. Therefore, Armando can claim an additional $24,000 because it does not exceed 30% of his AGI (which would be $24,000).

Thus, Armando can deduct all of his cash contributions totaling $28,000 and the $24,000 worth of stock, bringing him to a total of $52,000 in charitable deductions for the current year.