Larry recorded the following donations this year:$500 cash to a family in need$2,400 to a church$500 cash to a political campaignTo the Salvation Army household items that originally cost $1,200 but are worth $300.What is Larry's maximum allowable charitable contribution if his AGI is $60,000?

Question

Quizplus · Accepted Answer

The maximum allowable charitable contribution for someone with an AGI of $60,000 is 50% of their AGI, or $30,000. However, there are certain limitations on what types of donations count towards this limit.

Cash donations to qualified organizations (such as the church and the political campaign) are generally deductible up to 60% of the taxpayer's AGI. Therefore, Larry's cash donations of $500 and $500 are both fully deductible.

The donation of household items to the Salvation Army is deductible at the lower of their fair market value or their original cost. In this case, the items are worth $300, so that is the amount that can be deducted.

The total deductible amount for Larry's donations is $500 + $500 + $300 + $2,400 = $3,700. Therefore, his maximum allowable charitable contribution is $3,700.

Option D ($2,700) is the closest to the correct answer of $3,700, so it is the best choice.

Larry Recorded the Following Donations This Year:$500 Cash to a Family