Alma Geste has a painting that she purchased for $50,000 five years ago and whic

Question

Alma Geste has a painting that she purchased for $50,000 five years ago and which now has a fair market value of $100,000. She donates the painting to the Metropolitan Museum. Her current year adjusted gross income is $110,000.

A. Alma should take a charitable contribution deduction at the original cost basis of $50,000 so that the full amount is deductible in the current year, if she does not believe the excess charitable contribution taken at fair market value will ever be used because of AGI limitations.

B. Alma should take the fair market value deduction because it is twice as large as the cost basis deduction even if only $33,000 can be deducted in the current year, despite the fact that her estimated AGI for the next three years is only $50,000.

C. Alma should take a charitable contribution deduction at the original cost basis of $50,000 so that the full amount is deductible in the current year, because her estimated AGI for the next tax year is $200,000.

D. Alma's deduction is limited to the adjusted cost basis of the property because she donated tangible personal property which is being put to a use unrelated to the Museum's tax-exempt purpose.

Explanation / Answer

Solution:-D. Alma's deduction is limited to the adjusted cost basis of the property because she donated tangible personal property which is being put to a use unrelated to the Museum's tax-exempt purpose.

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