Question

Which of the following statements regarding charitable contributions is false?

A. Only contributions made to qualified charitable organizations are deductible.
B. Charitable contribution deductions are subject to a limitation based on the corporation's taxable income (before certain deductions).
C. Corporations can qualify to deduct a contribution before actually paying the contribution to the charity.
D. The amount deductible for non-cash contributions is always the adjusted basis of the property donated.

Answer 1

The correct answer is D. The false statement is that the amount deductible for non-cash contributions is always the adjusted basis of the property donated since usually the fair market value is used unless exceptions apply.

Step-by-step explanation:

The statement that is false regarding charitable contributions is: D. The amount deductible for non-cash contributions is always the adjusted basis of the property donated. The correct tax treatment for non-cash contributions is that the amount deductible is generally the fair market value of the property donated unless it falls under certain exceptions, which sometimes may necessitate using the adjusted basis instead.

So, when a corporation makes a non-cash charitable contribution, there are specific rules determining the value of the deduction. Contributions can be made in many forms, like donating property or stock, where market fluctuations and valuation come into play, complicating the process beyond a simple adjusted basis determination.