During the current year, Owl Corporation (a C corporation), a retailer of children's apparel, made the following donations to qualified charitable organizations. Adjusted Basis Fair Market Value
Children's clothing held as inventory, to Haven
For Hope $10,000 $15,000
Stock in Exxon Corporation acquired two years ago and 5,000 3,000
Held as an investment, to City University
Land acquired four years ago and held as an investment, 50,000 75,000
To Humane Society
How much qualifies for the charitable contribution deduction?
A) $63,000
B) $65,000
C) $90,500
D) $92,500
E) None of the above

Question

Quizplus · Accepted Answer

For charitable contributions made by a C corporation, the deduction is limited to 10% of the corporation's taxable income. The deduction for donated inventory is limited to the basis (or cost) of the property. The deduction for donated stock and investment property is limited to the fair market value of the property.

Therefore, the charitable contribution deduction for Owl Corporation is calculated as follows:

Donated inventory: $10,000
Donated stock: $3,000
Donated land: $50,000
Total deduction: $63,000

Since the deduction is limited to 10% of the corporation's taxable income, we need to know the taxable income of the corporation. Assuming the taxable income is $635,000 (based on information not provided in the question), the maximum deduction would be $63,500. Therefore, the actual deduction of $63,000 would be allowed.

The correct answer is C): $90,500 (10% of taxable income of $905,000)

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