Charity deduction question

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  • #3001980 Reply
    ssaetern
    Participant

    Moe Co. made cash contributions totaling $50,000 during the year. Before calculating its charitable deduction, Moe had taxable income of $350,000 after a $45,000 dividends-received deduction. What amount may Moe take as a charitable contribution deduction?

    Can Moe deduct the whole $50K since it's cash? Thanks.

    #3002445 Reply
    HanHan
    Participant

    The deduction is limited to 10% of taxable income before dividends-received deduction

    Taxable income before DRD = 350,000 + 45,000 = 395,000.
    10% of that is 39,500

    So only 39,500 of the 50k is deductible, the rest is carried forward.

    #3002448 Reply
    Lily
    Participant

    Yes, he can.

    Remember, taxpayers who do not itemize deductions may not deduct charitable contributions.

    CASH CONTRIBUTION can deduct up to 60% AGI.
    PROPERTY CONTRIBUTION can deduct up to 30% AGI.

    CARRY FORWARD THE EXCESS FOR 5 YEARS.

    #3002457 Reply
    HanHan
    Participant

    Yes, he can.

    Remember, taxpayers who do not itemize deductions may not deduct charitable contributions.

    CASH CONTRIBUTION can deduct up to 60% AGI.
    PROPERTY CONTRIBUTION can deduct up to 30% AGI.

    CARRY FORWARD THE EXCESS FOR 5 YEARS.

    I don't think that is accurate. The question is about corporation because only corporation has dividend-received deduction. Besides. corporations don't have AGI.

    The rules you mentioned are for individuals.
    Also the “carry forward for 5 years” rule is for corporation only.

    #3002469 Reply
    Lily
    Participant

    Oh yes, I answered for individuals.
    Thank you Han.

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