Gray is a calendar year taxpayer.In early December 2014,Gray's Board of Directors authorizes a pledge of an $80,000 donation to the Red Cross to help provide food and shelter to victims of natural disasters.The donation is paid as follows: $10,000 in late December 2014,$40,000 in February 2015,and $30,000 in early April 2015.Disregarding percentage limitations,the maximum deduction for 2014 is:

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Since the "pledge" was authorized by the board of directors,the $40,000 paid in February 2015 can be treated as being paid in 2014 (choice b. ).This alternative is not available to cash basis corporations (choice c. )or to individual taxpayers (choice d. ).The maximum an individual taxpayer can deduct for 2014 is $10,000.In no event can $80,000 be deducted for 2014 (choice a. ).

Gray Is a Calendar Year Taxpayer