Grace receives as a nontaxable stock dividend preferred stock with a § 306 taint of $200,000 to which she assigns a basis of $30,000.Assume the common stock upon which the preferred stock was issued has been held as an investment for four years.One month after the stock dividend and when it has a fair market value of $200,000,Grace contributes the preferred stock to a qualified charitable organization.With respect to the charitable contribution:

Question

Quizplus · Accepted Answer

When § 306 stock is contributed to a qualified charitable organization,the charitable deduction is reduced by the amount of the § 306 taint.[The $30,000 basis allocated to the preferred stock would be allocated back to Grace's basis in her common stock.See Reg.§ 1.306-1(b)(2).]

Grace Receives as a Nontaxable Stock Dividend Preferred Stock with a §