Final answer:
A corporation's charitable contribution is indeed limited to a percentage of its modified taxable income, generally 10%. This ensures that deductions are kept within reasonable bounds. However, for political contributions, the Citizens United ruling allows corporations to donate unlimited funds to PACs.
Step-by-step explanation:
The statement about a corporation's charitable contribution being limited to a percentage of modified taxable income is true. In the United States, the tax code specifies that corporations can deduct charitable donations up to a certain limit, which is typically 10% of their taxable income. However, it's important to differentiate between charitable contributions and political donations.
When it comes to political donations, the Supreme Court case Citizens United v. Federal Election Commission profoundly changed the landscape. The Court ruled that corporations and unions have the right to make political contributions and that these expenditures are a form of protected speech under the First Amendment. This decision lifted the previous restrictions and allowed for unlimited contributions by corporations to Political Action Committees (PACs).
Still, when we talk specifically about charitable contributions as opposed to political contributions, there are clear limits in place. These limits are important to ensure that corporations cannot deduct an excessive amount of their income for charity to reduce their overall tax liability more than lawmakers have deemed reasonable.