Smokey purchases undeveloped land in 1999 for $20,000. In the current year he contributes the property to the Camp Fire Girls of America to use as their summer camp. The fair market value of the land at the date of the contribution is $25,000. If Smokey's AGI is $100,000, what is his maximum deductible charitable contribution?

Question

Quizplus · Accepted Answer

When property is donated to a charitable organization, the donor may generally deduct the property's fair market value on the date of the contribution as a charitable contribution deduction. Therefore, Smokey may deduct $25,000 as a charitable contribution. However, the deduction for charitable contributions is limited to 30% of the donor's AGI in the year of the contribution. In this case, 30% of Smokey's AGI of $100,000 is $30,000. Since the $25,000 charitable contribution deduction is less than the $30,000 limitation, Smokey may deduct the full $25,000. Therefore, the correct answer is choice C) $25,000.

Smokey Purchases Undeveloped Land in 1999 for $20,000