- This topic has 5 replies, 4 voices, and was last updated 9 years, 9 months ago by
.
-
Topic
-
In the first question, the contribution limit is 30% of AGI. In the second question, it is 50% of AGI. How do you know when to use 30% or 50%?
Moore, a single taxpayer, had $50,000 in adjusted gross income for 2014. During 2014, she contributed $18,000 to her church. She had a $10,000 charitable contribution carryover from her 2013 church contribution.
What was the maximum amount of properly substantiated charitable contributions that Moore could claim as an itemized deduction for 2014?
A. $10,000
B. $18,000
C. $25,000
D. $28,000
28,000. An individual’s charitable contribution to public charities may not exceed 50 percent of the individual’s adjusted gross income. The 50 percent deduction ceiling applies to contributions made to:
-churches;
-educational institutions that maintain a regular faculty and curriculum;
-hospitals and medical schools;
-organizations supported by the government that hold property and/or investments for the benefit of a college or university;
-federal, state or local governmental units; and
-organizations normally receiving most of its support from the public or a governmental unit. The amount that exceeds the 50 percent deduction ceiling may be carried forward for 5 years.
Since Moore’s charitable contributions were made to an organization (a church) qualifying for a 50 percent deduction ceiling, she may deduct up to $25,000, 50 percent of her adjusted gross income of $50,000. Moore may meet this ceiling by deducting the $18,000 that she contributed to her church in 2014 and carrying forward $7,000 of the $10,000 charitable contribution carryover from her 2013 church contribution.
Stein, an unmarried taxpayer, had adjusted gross income of $80,000 for the year, and qualified to itemize deductions. Stein had no charitable contribution carryovers and only made one contribution during the year.
Stein donated stock, purchased seven years earlier for $17,000, to a tax-exempt educational organization. The stock was valued at $25,000 when it was contributed.
What is the amount of charitable contributions deductible on Stein’s current year income tax return?
A. $17,000
B. $21,000
C. $24,000
D. $25,000
$24,000 is correct. Although Stein can deduct the fair market value (FMV) of $25,000 for the stock contributed, the deduction is limited to 30% of his AGI, $80,000.
- You must be logged in to reply to this topic.
