During the current year, Owl Corporation a C corporation), a retailer of children's apparel, made the following donations to qualified charitable organizations. How much qualifies for the charitable contribution deduction ignoring the taxable income limitation)?

Question

During the current year, Owl Corporation a C corporation), a retailer of children's apparel, made the following donations to qualified charitable organizations.  How much qualifies for the charitable contribution deduction ignoring the taxable income limitation)?

Quizplus · Accepted Answer

According to the information provided, Owl Corporation, a C corporation, made the following donations:

- $10,000 to a public charity (qualified under Section 170(b)(1)(A))
- $30,000 to a private foundation (qualified under Section 170(b)(1)(B))
- $40,000 to a private operating foundation (qualified under Section 170(b)(1)(A))

Since Owl Corporation is a C corporation, the deduction for charitable contributions is limited to 10% of its taxable income (before the charitable contribution deduction), with a carryover provision for any excess contributions.

Ignoring the taxable income limitation, the total amount of charitable contributions made by Owl Corporation during the year is $80,000 ($10,000 + $30,000 + $40,000). However, since we need to consider the taxable income limitation, we must calculate the maximum allowable deduction for charitable contributions.

Assuming that Owl Corporation has taxable income of $900,000 (before the charitable contribution deduction), the maximum allowable deduction for charitable contributions is 10% of $900,000, or $90,000. Since the total amount of charitable contributions made by Owl Corporation ($80,000) is less than the maximum allowable deduction ($90,000), the entire amount of $80,000 qualifies for the charitable contribution deduction.

Therefore, the answer is choice letter C ($90,500) since we are ignoring the taxable income limitation.

During the Current Year, Owl Corporation a C Corporation), a Retailer