This year, Fliedermaus Corporation (a C corporation), a retailer of costume appa
ID: 2541087 • Letter: T
Question
This year, Fliedermaus Corporation (a C corporation), a retailer of costume apparel, made the following donations to qualified charitable organizations.
Adjusted Basis
Fair Market Value
$10,000
$15,000
5,000
3,000
50,000
75,000
How much qualifies for the charitable contribution deduction? Disregarding the 10% limitation.
$63,000
$65,000
$90,500
$92,500
None of the above
Adjusted Basis
Fair Market Value
Bat costumes held as inventory, to Home for Indigent Superheroes$10,000
$15,000
Stock in LexCorp acquired two years ago andheld as an investment, to Gotham University
5,000
3,000
Land acquired four years ago and held as aninvestment, to Tompkins Medical Clinic
50,000
75,000
Explanation / Answer
One-half of the appreciation on inventory can be claimed.
Therefore,
Allowed deduction for inventory donation = $10,000 + ($15,000 - $10,000)/2 = $12,500
Stock in Lex was acquired two years ago so it is long-term capital gain intangible property. Therefore, the fair market value of the stock will be allowed as deduction.
Allowed deduction for donation of stock = $3,000
Land was held as an investment. It is not a capital asset. Therefore, deduction in case of land will be limited to the lower of adjusted basis or fair market value.
Allowed deduction for donation of land = $50,000
Thus,
Total qualified charitable contribution deduction = $12,500 + $3,000 + $50,000 = $65,500
Hence, the correct answer is e. None of the above
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