Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations in 2012: The land had been held as an investment and was acquired 4 years ago.Shortly after receipt, the City of Terre Haute sold the land for $210,000.Karen's AGI is $450,000.The allowable charitable contribution deduction is:

Question

Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations in 2012:  The land had been held as an investment and was acquired 4 years ago.Shortly after receipt, the City of Terre Haute sold the land for $210,000.Karen's AGI is $450,000.The allowable charitable contribution deduction is:

Quizplus · Accepted Answer

To calculate the allowable charitable contribution deduction, we must first determine the amount of the contribution.

For the donation of the land, the amount of the contribution is equal to the fair market value of the property. Since the land was sold for $210,000 shortly after the donation, we can assume that this was the fair market value at the time of the donation.

Next, we must determine the limitation on charitable contributions based on Karen's AGI. For donations of long-term capital gain property, the deduction is limited to 30% of the taxpayer's AGI.

30% of Karen's AGI of $450,000 is $135,000. Since the amount of the contribution ($210,000) is less than the limitation ($135,000), the full amount of the contribution is deductible.

Therefore, the allowable charitable contribution deduction is $210,000, which is Choice C.

Karen, a Calendar Year Taxpayer, Made the Following Donations to Qualified