Carl purchased a machine for use in his trade or business two years ago for $30,000. During the current year, Carl donates the machine to the local community college. At the time of the contribution, the machine's adjusted basis is $10,000 and its FMV is $15,000. Carl's AGI for the year is $48,000. What is the amount of his charitable contribution deduction?

Question

Quizplus · Accepted Answer

The charitable contribution deduction for property is generally limited to the lesser of the property's fair market value (FMV) or its adjusted basis. In this case, the adjusted basis of the machine is $10,000, which is less than the FMV of $15,000. Therefore, Carl's deduction is limited to the adjusted basis of $10,000.

Carl Purchased a Machine for Use in His Trade or Business