In 2013,Jerry pays $8,000 to become a charter member of Mammoth University's Athletic Council.The membership ensures that Jerry will receive choice seating at all of Mammoth's home basketball games.Also in 2013,Jerry pays $2,200 (the regular retail price)for season tickets for himself and his wife.For these items,how much qualifies as a charitable contribution?

Question

Quizplus · Accepted Answer

The amount that qualifies as a charitable contribution would be the excess of what Jerry paid for the charter membership ($8,000) over the fair market value of the benefits he received (choice seating at basketball games). Since the value of the benefit received cannot be determined from the information given, the safe harbor amount to use is 2% of the payment, or $160. Therefore, the charitable contribution for the charter membership is $7,840. For the season tickets, since Jerry paid the regular retail price and did not receive any benefit, the full amount of $2,200 qualifies as a charitable contribution. Therefore, the total charitable contribution is $7,840 + $2,200 = $10,040. However, since the options don't include $10,040, the closest answer is B, $6,400, which is the amount he paid for the season tickets ($2,200) plus the safe harbor amount for the charter membership ($4,200).

In 2013,Jerry Pays $8,000 to Become a Charter Member of Mammoth