Morris Donated stock (capital gain property) to a public charity. He purchased t

Question

Morris Donated stock (capital gain property) to a public charity. He purchased the stock 3 years ago for $150,000. On the date of the contribution, the stock had a fair market value of $100,000. Morris also donated a painting (capital gain property) to a library, a public charity. He purchased the painting 5 years ago for $50,000. On the date of the contributions, the painting had a fair market value of $300,000. The library manager told Morris he was going to sell the painting. a. What is the amount of each charitable contribution? b. What would be the percentage of adjust gross income limitation that would apply to each contribution? c. suggest a tax plan that might had resulted in a better tax situation for Morris.

Explanation / Answer

a. Charitable contribution or the stock donated = $ 100000

Charitable contribution or the painting donated = $ 0

b.  contributions to charitable organizations may be deducted up to 50 percent of adjusted gross income computed without regard to net operating loss carrybacks. Contributions to certain private foundations, veterans organizations, fraternal societies, and cemetery organizations are limited to 30 percent adjusted gross income (computed without regard to net operating loss carrybacks), however.

c. morris shouldnt have donated the painting, after knowing the fact that it has appreciated in value, and it will be sold by the library manager. morris will not be able to deduct the charitable contribution with respect to the painting donated, because of this. hence he shouldnt have donated the painting.

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