During the current year, Sage Corporation (a calendar year taxpayer) had the following income and expenses: $\begin{array}{lr}
\text { Income from operations } & \$ 200,000 \
\text { Expenses from operations } & 125,000 \
\text { Qualifying dividends from domestic corporation } &\
\text { in which Sage owns a } 40 \% \text { interest }&17,000\
\text { NOL carryover from prior year }&2,000
\end{array}$ On October 1, Sage Corporation made a contribution to a qualified charitable organization of $25,000 in cash (not included in any of the above items).Determine Sage Corporation's charitable contribution deduction for the current year.
A)$7,300.
B)$9,000.
C)$9,200.
D)$25,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The charitable contribution deduction is limited to 10% of the corporation's taxable income before the deduction of the charitable contribution, dividends-received deduction, and NOL carryover. Taxable income before these deductions is $200,000 - $125,000 + $17,000 = $92,000. Thus, the maximum deductible contribution is 10% of $92,000, which is $9,200. However, the actual contribution was $25,000, so the deductible amount is $9,200.

During the Current Year, Sage Corporation (A Calendar Year Taxpayer)