During the current year,Kingbird Corporation (a calendar year C corporation)had the following income and expenses: On October 1,Kingbird Corporation made a contribution to a qualified charitable organization of $6,300 in cash (not included in any of the above items).Determine Kingbird's charitable contribution deduction for the current year.
A)$0.
B)$4,230.
C)$4,500.
D)$6,300.
E)None of the above.

Question

During the current year,Kingbird Corporation (a calendar year C corporation)had the following income and expenses:  On October 1,Kingbird Corporation made a contribution to a qualified charitable organization of $6,300 in cash (not included in any of the above items).Determine Kingbird's charitable contribution deduction for the current year.
A)$0. 
B)$4,230. 
C)$4,500. 
D)$6,300. 
E)None of the above.

Quizplus · Accepted Answer

Charitable contributions are deductible up to a certain limit based on the corporation's taxable income. For corporations, the limit is 10% of taxable income before charitable contribution deduction, which is calculated by adding back the charitable contributions made during the year. In this case, Kingbird Corporation's taxable income before the charitable contribution deduction is $43,000 ($50,000 - $7,000), and the limit for charitable contribution deduction is $4,300 ($43,000 x 10%). Since the corporation made a charitable contribution of $6,300, it can only deduct $4,500 ($4,300 limit plus $200 carryover to the next year). Therefore, the correct answer is C) $4,500.

During the Current Year,Kingbird Corporation (A Calendar Year C Corporation)had