A clothing manufacturing corporation donates last year's inventory to the Red Cross for use in its disaster relief efforts. The clothes have a fair market value of $200,000 and a basis to the corporation of $75,000. What is its charitable contribution deduction?

Question

Quizplus · Accepted Answer

The charitable contribution deduction is limited to the basis of the inventory or the fair market value, whichever is less. In this case, the basis is $75,000 and the fair market value is $200,000. Therefore, the deduction is limited to the basis of $75,000.

A Clothing Manufacturing Corporation Donates Last Year's Inventory to the Red