Citron Company is a wholesale distributor of children's clothing.During the year,it donates clothes (cost of $60,000;retail value of $100,000)to Clothes for Needy (a qualified charitable organization).Disregarding percentage limitations,Citron's charitable contribution deduction is:

Question

Quizplus · Accepted Answer

If Citron is an individual,the deduction is limited to the lesser of fair market value ($100,000)or basis ($60,000).This rule eliminates choice d.If Citron is a C corporation,a special rule dealing with inventory donated for certain purposes allows a deduction of basis plus half of any appreciation,or $60,000 + [50% × ($100,000 - $60,000)] = $80,000 (choice a. ).

Citron Company Is a Wholesale Distributor of Children's Clothing