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

Question

Quizplus · Accepted Answer

No reduction for the appreciation on the Raptor,Inc. ,stock is necessary because,if sold,it would yield a long­term capital gain.Thus,Ralph's potential charitable deduction for the year is $157,500 [$63,000 (cash)+ $94,500 (fair market value of Raptor,Inc. ,stock)],but his allowable contribution deduction for the year is limited to $94,500 (50% of $189,000 AGI).Although the 30%-of-AGI limitation applies to capital gain property,which would result in a current deduction for the Raptor,Inc. ,stock of $56,700 (30% of $189,000 AGI),the overall 50%-of-AGI limitation applies to limit the total current deduction to $94,500.When the contributions for the tax year involve both 50% property (the cash of $63,000 in this case)and 30% property (the Raptor,Inc. ,stock),the allowable deduction comes first from the 50% property.Therefore,Ralph's allowable current deduction of
$94,500 consists of:
 11ea86f6_cc03_3347_8084_81654d20faee_TB4134_00 The unused portion of the Raptor,Inc. ,stock contribution of $63,000 [$94,500 (fair market value)- $31,500 (portion used currently)] may be carried over for five years.The carryover continues to be classified as 30% property in the carryover years.If Ralph plans his charitable deductions wisely,sooner or later he will be able to deduct the full $94,500 fair market value of the stock.

During the Current Year,Ralph Made the Following Contributions to the University