An individual has Net Income For Tax Purposes of $147,500.During the current year, the individual donates a depreciable capital asset with a fair market value of $300,000.The capital cost of this asset is $225,000 and it has a UCC $147,000.It is the only asset in its CCA class and no additions are made subsequent to the gift.If he elects to have the dona- tion valued at its fair market value, what is the maximum amount that this individual can claim as the basis for his charitable donations tax credit for the current year?

Question

Quizplus · Accepted Answer

The maximum charitable donations tax credit is limited to 75% of the individual's net income for tax purposes. Therefore, 75% of $147,500 is $110,625. However, since the donation is a capital asset, the individual can claim an additional 25% of the net capital gain ($300,000 - $225,000 = $75,000), which is $18,750. Thus, the total maximum claimable amount is $110,625 + $18,750 = $129,375. However, the correct choice should be $139,500, which suggests a miscalculation or additional context not provided.

An Individual Has Net Income for Tax Purposes of $147,500