Pluto Corporation contributes $30,000 to qualified charitable organizations during 2014. Pluto's 2014 taxable income before any charitable contribution deduction is $280,000. Included in that amount is a $10,000 dividend-received deduction amount. Pluto also has a carryover charitable contribution of $2,000 from 2013. What is the maximum amount Pluto Corporation can deduct as a charitable contribution for 2014?
A) $- 0 -
B) $28,000
C) $29,000
D) $30,000
E) $35,000

Question

Quizplus · Accepted Answer

The maximum charitable contribution deduction is 10% of taxable income before the charitable contribution deduction and before the dividend-received deduction. Therefore, the limit is 10% of $280,000, which is $28,000. Pluto can also use the $2,000 carryover from 2013, making the total deductible amount $28,000 + $2,000 = $30,000. However, the current year's contribution is limited to $28,000, so the total deduction is $28,000 + $1,000 from the carryover, totaling $29,000.

Pluto Corporation Contributes $30,000 to Qualified Charitable Organizations During 2014