In the current year,Plum Corporation,a computer manufacturer,donated 100 laptop computers to a local school district (a qualified educational organization).The computers were constructed by Plum earlier this year,and the school district allocated the computers among its various schools where they will be used for educational purposes.Plum's basis in the computers is $70,000,and their fair market value is $250,000.What is Plum's deduction for the contribution of the computers (ignoring the taxable income limitation)?
A)$70,000.
B)$140,000.
C)$160,000.
D)$250,000.
E)None of the above.

Question

Quizplus · Accepted Answer

For contributions of inventory to a qualified educational organization, the deduction is generally the lesser of the fair market value or the basis plus half the difference between the fair market value and the basis. Here, the deduction is $70,000 (basis) + 0.5 * ($250,000 - $70,000) = $140,000.

In the Current Year,Plum Corporation,a Computer Manufacturer,donated 100 Laptop Computers