Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations during the year: $$\begin{array} { l c r }
& \underline { \text { Basis } } & \underline { \text { Fair Market } } \
&&\underline { \text { Value } }\
\text { Cash donation to State University } & \$30,000&\$30,000 \
\text { Unimproved land to the City of Terre Haute, } & 70,000 & \$ 210,000 \
\text { Indiana }
\end{array}$$ ? The land had been held as an investment and was acquired 4 years ago.Shortly after receipt, the City of Terre Haute sold the land for $210,000.Karen's AGI is $450,000.The allowable charitable contribution deduction this year is:
A)$100,000.
B)$165,000.
C)$225,000.
D)$240,000.
E)None of the above.

Question

Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations during the year: $$\begin{array} { l c r } 
& \underline { \text { Basis } } & \underline { \text { Fair Market } } \
&&\underline { \text { Value } }\
\text { Cash donation to State University } & \$30,000&\$30,000  \
\text { Unimproved land to the City of Terre Haute, } & 70,000 & \$ 210,000 \
\text { Indiana }
\end{array}$$ ? The land had been held as an investment and was acquired 4 years ago.Shortly after receipt, the City of Terre Haute sold the land for $210,000.Karen's AGI is $450,000.The allowable charitable contribution deduction this year is:
A)$100,000.
B)$165,000.
C)$225,000.
D)$240,000.
E)None of the above.

Quizplus · Accepted Answer

The cash donation to State University is fully deductible, adding $30,000 to the deduction. For the unimproved land, since it was held as an investment and donated to a public charity, Karen can deduct the fair market value (FMV) of $210,000. However, the deduction for appreciated property is limited to 30% of AGI when donated to a public charity. Karen's AGI is $450,000, so the limit for the land donation is $135,000 (30% of $450,000). The total allowable deduction is the sum of the cash donation and the limited land donation, which is $30,000 + $135,000 = $165,000.

Karen, a Calendar Year Taxpayer, Made the Following Donations to Qualified