Remsco has taxable income of $74,000 and a charitable contribution limit modified taxable income of $79,000. Its charitable contributions for the year were $8,060. What is Remsco's current-year charitable contribution deduction and contribution carryover?
A)$7,400 current-year deduction; $660 carryover.
B)$8,060 current-year deduction; $0 carryover.
C)$500 current-year deduction; $7560 carryover.
D)$7,900 current-year deduction; $160 carryover.

Question

Quizplus · Accepted Answer

Remsco's current-year charitable contribution deduction is limited to 10% of its taxable income, which is $7,400 ($74,000 x 10%). Since the actual charitable contributions made by Remsco exceed this limit, it can deduct only up to $7,400 for the current year and carry over the remaining $660 ($8,060 - $7,400) to future years. Therefore, the correct answer is D: $7,400 current-year deduction and $660 carryover.

Remsco Has Taxable Income of $74,000 and a Charitable Contribution