Gold Corporation sells baseball bats and reported net income of $35,000 before charitable contributions.It contributed 100 bats to a local high school.Each bat has a FMV of $40 and a basis of $30.Determine Gold's taxable income and charitable contribution carryforward.

Question

Quizplus · Accepted Answer

Gold Corporation's taxable income is calculated as follows:
Net income before charitable contribution = $35,000 
Charitable contribution = 100 bats x ($40 FMV - $30 basis) = $1,000 
Taxable income = $35,000 - $1,000 = $34,000

Since the charitable contribution did not exceed 10% of Gold's taxable income, there is no charitable contribution carryforward. Therefore, the correct answer is C.

Gold Corporation Sells Baseball Bats and Reported Net Income of $35,000