Question

Ramon had AGI of $218,000 in 2019. He is considering making a charitable contribution this year to the American Heart Association, a qualified charitable organization. Determine the current allowable charitable contribution deduction in each of the following independent situations, and indicate the treatment for any amount that is not deductible currently. Identify any planning ideas to minimize Ramon's tax liability. a. A cash gift of $109,000. In the current year, Ramon may deduct $ since his charitable contribution is limited to Feedback Check My Work A charitable contribution is defined as a gift made to a qualified organization. The potential charitable contribution deduction is the total of all donations, both money and property, that qualify for the deduction. b. A gift of OakCo stock worth $109,000 on the contribution date. Ramon had acquired the stock as an investment two years ago at a cost of $98,100. The stock's value for determining the contribution is $ . The deduction for 2019 is $ . The remaining can be carried forward for years.

Answer 1

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Answer are highlighted in yellow: Solution: a) In the current year, Ramon may deduct $109,000 since his charitable contribution is limited to $130,800 (218000*60%) b) The stock's value for determining the contribution is $109,000 (fair value). The deduction for 2019 is $ 65,400_(218000*30%). The remaining for 5 years. $43,600 can be carried forward (109000-65400) c) The contribution is valued at $ 98,100 The amount deductible in the current year is $ 98,100 Because it will be sold further, hence, deduction will be lower of FMV or cost. d) Present value factor of current year will be 1.0000. As required, assuming ingnorance of Overall limitation on certial itemized deduction: Present value of tax saving in current year after AGI limit (218000*60%) *24%*1 = Present value of tax saving for deferred part, if paid in current year (((152600-130800) *0.9434)*32%) Total Present value of tax saving from the tax deduction if made this year= $ $ $ 31,392 6,581 37,973 2) Present value of deduction made next year (152600*32%)*0.9434 $ 46,068