In the current year, Zircon Corporation donated scientific property worth $300,000 to City University (a qualified charitable organization) to be used in research. The basis of the property was $140,000, and Zircon had held it for ten months as inventory. Zircon Corporation may deduct $220,000 as a charitable contribution (ignoring the taxable income limitation).

Question

Quizplus · Accepted Answer

The amount Zircon Corporation can deduct as a charitable contribution is calculated as the fair market value of the property donated ($300,000) minus the lesser of the property's basis ($140,000) or its inventory value at the time of contribution (which is not given in the scenario). In this case, since the property was held as inventory for less than a year, the basis of $140,000 would be used as the lesser amount. Therefore, $300,000 - $140,000 = $160,000 would be the deductible amount. However, since the scenario states to ignore the taxable income limitation, Zircon Corporation can deduct the maximum amount of $220,000.

In the Current Year, Zircon Corporation Donated Scientific Property Worth