Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations during the year: $\begin{array}{lcr}&\text { Basis}&\text { Fair Market }\&&\text { Value }\
\text { Cash donation to State University } & \$ 30,000 & \$ 30,000 \
\text { Unimproved land to the City of Terre Haute, IN } & 70,000 & 210,000
\end{array}$ 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

Quizplus · Accepted Answer

Karen's allowable charitable contribution deduction consists of the cash donation and the fair market value of the unimproved land. The cash donation is straightforward at $30,000. For the land, since it was held as an investment and donated to a public charity, Karen can deduct the fair market value of $210,000, assuming the charity's use of the land is related to its tax-exempt purpose. 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 30% of $450,000, which is $135,000. The cash donation does not face this limit since it falls under the 60% AGI limit for cash donations to public charities. Therefore, the total allowable deduction is $135,000 (for the land, limited by the 30% AGI rule) plus $30,000 (for the cash donation), totaling $165,000.

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