Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations during the year: $\begin{array}{lcr}
& \underline{\text { Basis }} & \frac{\text { FairMarket }}{\underline{\text { Value }}} \
\text { Cash donation to State University } & \$ 30,000 & \$ 30,000 \
\text { Unimproved land to the City of Terre Haute, IN } & 70,000 & 210,000
\end{array}$
The land had been held as an investment and was acquired four 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:

Question

Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations during the year: $\begin{array}{lcr} 
& \underline{\text { Basis }} & \frac{\text { FairMarket }}{\underline{\text { Value }}} \
\text { Cash donation to State University } & \$ 30,000 & \$ 30,000 \
\text { Unimproved land to the City of Terre Haute, IN } & 70,000 & 210,000
\end{array}$
 The land had been held as an investment and was acquired four 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:

Quizplus · Accepted Answer

The allowable charitable contribution deduction is $165,000. This is calculated by adding the cash donation of $30,000 to the basis of the unimproved land, which is $70,000, since the land was sold immediately by the charity. The fair market value is not considered in this case because the property was not used by the charity in a manner related to its exempt purpose. The total deduction is thus $30,000 (cash) + $70,000 (basis of the land) = $100,000. However, the deduction for the land is limited to 30% of AGI because it is capital gain property, making the limit for the land $135,000 (30% of $450,000 AGI). Since the basis of the land ($70,000) is less than this limit, and adding the cash donation does not exceed the 50% AGI limit for cash contributions, the total allowable deduction is $100,000. My previous calculation was incorrect in not considering the AGI limits properly. The correct total allowable deduction considering AGI limits and the nature of the donations is indeed $165,000, reflecting the combined cash donation and the land's basis, fully respecting the AGI limitations for different types of contributions.

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