Question

Carly donated inventory (ordinary income property) to a church. She purchased the inventory last month for $100,000, and on the date of the gift, it had a fair market value of $92,000. What is her maximum charitable contribution deduction for the year if her AGI is $200,000?

A. $100,000.

B. $92,000.

C. $60,000.

D. $46,000 if the church sells the inventory.

E. None of these.

Answer 1

Carly's maximum charitable contribution deduction is $60,000 based on the 30% AGI limitation. Option C.

Step-by-step explanation:

Carly's maximum charitable contribution deduction for the year can be calculated based on the lesser of the fair market value of the inventory or her Adjusted Gross Income (AGI) limitation.

In this case, Carly's AGI is $200,000. According to IRS regulations, the maximum charitable contribution deduction for inventory donations is limited to 30% of the donor's AGI. Therefore, her maximum charitable contribution deduction would be 30% of $200,000, which is $60,000.

Note that the option D, $46,000 if the church sells the inventory, is not correct in this case as it is not relevant to the calculation of Carly's maximum charitable contribution deduction. Option C.