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1. John Jones has adjusted gross income of $35,000. During 2015, John contribute

ID: 2415562 • Letter: 1

Question

1. John Jones has adjusted gross income of $35,000. During 2015, John contributed $4,000 in cash to his church and stock with a fair market value of $22,000 to the Girl Scouts. The stock had cost John $16,000. What is John's charitable best possible contribution deduction for 2015 and how does that affect future years?

2. Jim Jeeves is a single individual. During the year, his car which he used entirely for pleasure was stolen and never recovered. The car had a fair market value of $14,000 before it was stolen, which was less than the car's adjusted basis. Jim received only $8,500 as a recovery from his insurance company. His adjusted gross income is $15,000. What is the amount of the personal casualty loss deduction that Jim can report as an itemized deduction for the year (assume he itemizes)?

Explanation / Answer

Answer1

$ 4000 cash contribution (limited to 50% of AGI) => $ 4000

$22000 stock contribution (limited to 30% of AGI) => $ 10500

Total charitable contribution => $ 14500

Answer 2

Decline in Fair market Value => $ 14000

Non Portion in Business => 100%

Nonbusiness decline in value => $14000

Less: Nonbusiness portion of insurance recovery => $ 8500

Less: Reduction => $ 100

Less: 10% of adjusted gross income => $ 1500

Itemized personal casualty loss deduction => $ 3900