Karen,a calendar year taxpayer,made the following donations to qualified charitable organizations in the current year: 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:
A)$84,000 if the reduced deduction election is not made.
B)$100,000 if the reduced deduction election is not made.
C)$165,000 if the reduced deduction election is not made.
D)$170,000 if the reduced deduction election is made.
E)None of the above.

Question

Karen,a calendar year taxpayer,made the following donations to qualified charitable organizations in the current year:  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:
A)$84,000 if the reduced deduction election is not made. 
B)$100,000 if the reduced deduction election is not made. 
C)$165,000 if the reduced deduction election is not made. 
D)$170,000 if the reduced deduction election is made. 
E)None of the above.

Quizplus · Accepted Answer

To calculate the allowable charitable contribution deduction, we first need to determine the deduction limit. For donations of long-term capital gain property (property held for more than one year), the deduction limit is 30% of AGI. So, in this case, the deduction limit is 30% of $450,000 or $135,000.
Now, we need to compare the deduction limit to the total value of Karen's donations. The total value of the donations is $250,000 (cash donation of $40,000 + land donation of $210,000). Since the total value of the donations is less than the deduction limit, Karen can take the full value of the donations as a charitable contribution deduction.
Therefore, the allowable charitable contribution deduction is $250,000 if the reduced deduction election is not made.

Karen,a Calendar Year Taxpayer,made the Following Donations to Qualified Charitable