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) Markita can deduct the full $1,200 fair market value.
b) Markita cannot deduct the donation of stock held for less than a year.
c) Markita's deduction is limited to her basis in the stock.
d) Markita's deduction is limited to the stock's appreciation value.

Answer 1

Markita can only deduct the basis amount of the stock, which is $1,000, not its fair market value, since she held the stock for less than a year.

Step-by-step explanation:

When Markita donated stock that she held for less than a year to a qualified charitable organization, her deduction is limited to her basis in the stock. Since her basis is $1,000 and the fair market value is $1,200, the maximum deductible amount is equal to the basis, which is the cost she incurred to purchase the stock. Therefore, the correct statement regarding Markita's donation is that her deduction is limited to her basis in the stock, which is $1,000.