Madeoff donated stock (capital gain property) to a public charity. He purchased the stock 3 years ago for $100,000, and on the date of the gift, it had a fair market value of $200,000. What is his maximum charitable contribution deduction for the year related to this stock if his AGI is $500,000? (before considering the itemized deduction phase-out)

Question

Quizplus · Accepted Answer

Since the stock was held for more than one year and was donated to a public charity, the maximum charitable contribution deduction is equal to the fair market value of the stock (i.e., $200,000). However, the deduction is limited to 30% of the donor's adjusted gross income (AGI) for the year of the donation (i.e., $500,000). Therefore, the maximum deduction allowable is $150,000 (30% x $500,000).

Madeoff Donated Stock (Capital Gain Property) to a Public Charity