Monroe Corporation reported the following results for the current year: Included in the above is $5,000 of qualified production activities income. In addition, Monroe Corporation has a $5,000 NOL carryforward from last year. How much can Monroe Corporation take as a charitable contribution deduction in the current year?

Question

Monroe Corporation reported the following results for the current year:  Included in the above is $5,000 of qualified production activities income. In addition, Monroe Corporation has a $5,000 NOL carryforward from last year. How much can Monroe Corporation take as a charitable contribution deduction in the current year?

Quizplus · Accepted Answer

The maximum charitable contribution deduction is generally limited to 10% of the taxpayer's taxable income before the charitable contribution deduction. Monroe Corporation's taxable income before the charitable contribution deduction is $100,000 ($110,000 - $5,000 NOL carryforward - $5,000 qualified production activities income). Therefore, the maximum charitable contribution deduction is $10,000 (10% of $100,000).

Monroe Corporation Reported the Following Results for the Current Year