Question

Donna donates stock in Chipper Corporation to the American Red Cross on September 10, 2019. She purchased the stock for $19,775 on December 28, 2018, and it had a fair market value of $28,250 when she made the donation.a. What is Donna’s charitable contribution deduction?The stock is treated as capital gain property and Donna's charitable contribution deduction is $ for tax purposes.b. Assume instead that the stock had a fair market value of $16,950 (rather than $28,250) when it was donated to the American Red Cross. What is Donna’s charitable contribution deduction?

Answer 1

a. $19,775

b. $16,950

Step-by-step explanation:

a. In the case of the charitable contribution, the full deduction is allowed of fair market value if the stock is held for more than one year but if the stock is held is less than the one year so it would be limited to the purchase price

Now in the first case

Purchase date is December 28, 2018

Donation date is September 10, 2019

As we can see that the stock is held for less than one year so it would be limited to the purchase price i.e $19,775

b. Now the contribution charitable deduction is limited to the fair market value of the stock i.e $16,950