Question

Cash donations to public charities are limited to (1)% of a taxpayer's AGI. Donations of capital gain property to public charities are generally limited to (2)% of a taxpayer's AGI. And, donations of certain capital gain property to private nonoperating foundations are limited to (3)% of AGI." Fill in the blanks to complete the sentence:

a) (1) 20; (2) 30; (3) 50
b) (1) 30; (2) 20; (3) 10
c) (1) 60; (2) 40; (3) 30
d) (1) 50; (2) 30; (3) 20

Answer 1

The correct answer to the student's question about the limits on charitable contributions as a percentage of AGI is option (c): (1) 60%; (2) 30%; (3) 30%. These percentages are set by the IRS to guide taxpayers in their charitable giving.

Step-by-step explanation:

The limits on charitable contributions as a percentage of a taxpayer's adjusted gross income (AGI) vary. Cash donations to public charities are limited to 60% of AGI. Donations of capital gain property to public charities are generally limited to 30% of AGI.

Lastly, donations of certain capital gain property to private nonoperating foundations are limited to 30% of AGI. Therefore, the correct completion of the sentence with missing percentages is (1) 60; (2) 30; (3) 30, which corresponds to option (c).

When discussing taxation, it's essential to consider the impact of the tax code on charitable giving and understand how these deductions work.

The percentages provided guide taxpayers to maximize their contributions within the legal boundaries set by the IRS. The subject of charity contributions within the tax code is both complex and vital, as it helps to encourage giving to charitable organizations.