Question

Ramon had AGI of $180,000 in 2023. He is considering making a charitable contribution this year to the American Heart Association, a situations, and indicate the treatment for any amount that is not deductible currently. Identify any planning ideas to minimize Ramon's tax liability. a. A cash gift of $95,000. In the current year, Ramon may deduct $ ✓ since his charitable contribution is limited to $. Feedback Check My Work A charitable contribution is defined as a gift made to a qualified organization. The potential charitable contribution deduction is the total of donations, both money and property, that qualify for the deduction. b. A gift of OakCo stock worth $95,000 on the contribution date. Ramon had acquired the stock as an investment two years ago at a cost of $84,000. The stock's value for determining the contribution is $ ✓. The deduction for 2023 is ₫ for years. Feedback Check My Work Correct c. A gift of a painting worth $95,000 that Ramon purchased three years ago for $60,000. The charity has indicated that it would sell the painting to generate cash to fund medical research. The contribution is valued at $ ✓. The amount deductible in the current year is $ X.

Answer 1

For a cash gift, the deductible amount depends on the limit on charitable contributions. For a stock gift, the deduction is based on the value of the stock. For a painting gift, the amount deductible depends on the value of the contribution.

Step-by-step explanation:

For a cash gift of $95,000, Ramon may deduct $ X since his charitable contribution is limited to $ Y.

For a gift of OakCo stock worth $95,000 on the contribution date, Ramon acquired the stock as an investment two years ago at a cost of $84,000. The stock's value for determining the contribution is $ Z. The deduction for 2023 is $ W for years.

For a gift of a painting worth $95,000 that Ramon purchased three years ago for $60,000 and the charity wants to sell it, the contribution is valued at $ V. The amount deductible in the current year is $ U.

Answer 2

a. Ramon's cash gift of $95,000 can be fully deducted in the current year since his charitable contribution deduction limit for cash gifts is 60% of his AGI, which is $108,000 ($180,000 AGI * 60%).

How to solve

b. For the gift of OakCo stock, Ramon's deduction is limited to the lesser of his cost basis in the stock ($84,000) or the stock's fair market value on the contribution date ($95,000).

Therefore, Ramon's deduction for 2023 is $84,000. He can carry over the remaining $11,000 deduction for up to five years.

c. Ramon's deduction for the painting is capped at his cost basis ($60,000) because the charity plans to sell it, not use it for its tax-exempt activities. He can't deduct the extra $35,000 immediately but may do so in the future if his deduction limit remains.

Planning ideas to minimize Ramon's tax liability:

Combine several years of charitable donations into a single year to surpass the yearly deduction limit.

Donate appreciated assets instead of cash to avoid capital gains. Use a donor-advised fund for a sizable deduction.

For estate tax reduction, consider leaving a charitable gift in the will.