Monroe Corporation reported the following results for the current year: $\begin{array}{ll}
\text {Gross income from operation }&\$150,000 \
\text { Operating expenses}&145,000 \
\text {Dividends from $ 30 \% $ owned domestic corporation }&100,000 \
\text {Long-term capital gain }&2,000 \
\text {Short-term capital loss }&(3,000) \
\text {Charitable contributions }& 15,000\
\end{array}$
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: $\begin{array}{ll}
\text {Gross income from operation }&\$150,000 \
\text { Operating expenses}&145,000 \
\text {Dividends from $ 30 \% $ owned domestic corporation }&100,000 \
\text {Long-term capital gain }&2,000 \
\text {Short-term capital loss }&(3,000) \
\text {Charitable contributions }& 15,000\
\end{array}$
 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 charitable contribution deduction is limited to 10% of taxable income before the deduction of the charitable contribution, NOL, and dividends received deduction. Taxable income is $150,000 (gross income) - $145,000 (operating expenses) + $100,000 (dividends) + $2,000 (capital gain) - $3,000 (capital loss) = $104,000. 10% of $104,000 is $10,400, but the maximum deduction is $10,000 due to the limitation.

Monroe Corporation Reported the Following Results for the Current Year