Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations during the 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 this year is:

Question

Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations during the year:
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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 this year is:

Quizplus · Accepted Answer

To calculate the allowable charitable contribution deduction, we need to consider the different types of donations made by Karen:

1) Cash donation of $25,000: The deduction for cash donations is limited to 60% of AGI. Therefore, Karen can deduct $25,000.

2) Appreciated property donation of land worth $200,000: The deduction for appreciated property donations is limited to 30% of AGI, and the FMV of the donated property. Since the land was held as an investment and acquired more than a year ago, Karen can deduct the full FMV of $200,000.

3) Carryover donation of $50,000 from a prior year: If the carryover donation is from a year before 2018, the deduction is limited to 50% of AGI. Since there is no information to suggest otherwise, we will assume that the carryover donation is subject to this limitation. Therefore, Karen can deduct $50,000.

Adding up all the deductions, we get:

$25,000 + $200,000 + $50,000 = $275,000

However, since the total deduction cannot exceed 60% of AGI, we need to limit the deduction to $270,000 (60% of $450,000).

Therefore, the allowable charitable contribution deduction this year is $165,000 ($25,000 + $200,000 + $20,000 (the excess over 60% of AGI)). Option B) is the correct choice.

Karen, a Calendar Year Taxpayer, Made the Following Donations to Qualified