Zircon Corporation donated scientific property worth $300,000 to City University (a qualified charitable organization)to be used in research.The basis of the property was $140,000,and Zircon had held it for ten months as inventory.Zircon Corporation may deduct $220,000 as a charitable contribution (ignoring the taxable income limitation).

Question

Quizplus · Accepted Answer

The deductible amount for a charitable contribution of inventory is limited to its fair market value, not its basis. In this case, the fair market value is $300,000, so Zircon can deduct that amount as a charitable contribution. The fact that it was held as inventory for ten months does not affect the deduction.

Zircon Corporation Donated Scientific Property Worth $300,000 to City University