During 2012, Ralph made the following contributions to the University of Oregon (a qualified charitable organization): Ralph acquired the stock in Raptor, Inc., as an investment fourteen months ago at a cost of $42,000. Ralph's AGI for 2012 is $189,000. What is Ralph's charitable contribution deduction for 2012?
A)$56,700.
B)$63,000.
C)$94,500.
D)$157,500.
E)None of the above.

Question

During 2012, Ralph made the following contributions to the University of Oregon (a qualified charitable organization):  Ralph acquired the stock in Raptor, Inc., as an investment fourteen months ago at a cost of $42,000. Ralph's AGI for 2012 is $189,000. What is Ralph's charitable contribution deduction for 2012?
A)$56,700. 
B)$63,000. 
C)$94,500. 
D)$157,500. 
E)None of the above.

Quizplus · Accepted Answer

Ralph's deduction for the donation of the Raptor, Inc. stock is the fair market value of the stock at the time of the donation. Since the stock was held for over one year, the fair market value is the average of the highest and lowest trading prices on the date of the donation, which was $135 and $150 respectively. The average is $142.50, and since Ralph donated 1,000 shares, the total deduction is $142,500.

However, Ralph's deduction is limited to 30% of his AGI in the year of the donation, since he donated property that is considered a capital gain asset. So the maximum deduction he can take for the donation of the stock is $56,700 (30% of $189,000). Therefore, the correct answer is C) $94,500, which is the value of the donation, but limited to the maximum deduction allowed.

During 2012, Ralph Made the Following Contributions to the University