Stewart had adjusted gross income of $22,000 in 2017.During the year,he made the following contributions to qualified charities: - $7,000 cash
- 1,000 shares of Able Corporation common stock,acquired in 1980 (cost and fair market value of $5,000)

Considering the charitable contribution deduction limitation,what amount can Stewart claim as a deduction for charitable contributions in 2017?

Question

Stewart had adjusted gross income of $22,000 in 2017.During the year,he made the following contributions to qualified charities: - $7,000 cash
- 1,000 shares of Able Corporation common stock,acquired in 1980 (cost and fair market value of $5,000)
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Considering the charitable contribution deduction limitation,what amount can Stewart claim as a deduction for charitable contributions in 2017?

Quizplus · Accepted Answer

The deduction for charitable contributions is limited to a percentage of the taxpayer's adjusted gross income (AGI). For individuals, the limit is generally 50% of AGI for cash contributions to public charities (such as the $7,000 cash contribution) and 30% of AGI for contributions of appreciated property (such as the Able Corporation stock). However, if the taxpayer makes both types of contributions, the overall limit is 50% of AGI.

In this case, the cash contribution of $7,000 is within the 50% limit, so it can be fully deducted. The stock contribution is limited to 30% of AGI, which in this case is $6,600 (30% of $22,000). Therefore, the total amount of charitable contributions that can be claimed as a deduction is $7,000 + $6,600 = $13,600. However, since the limit for overall charitable contributions is 50% of AGI, the deduction must be reduced to $11,000 (50% of $22,000). Therefore, the taxpayer can claim a charitable contribution deduction of $11,000 on their 2017 tax return.

Stewart Had Adjusted Gross Income of $22,000 in 2017