Question

Problem 10-36 (LO. 6, 8) In December of each year, Eleanor Young contributes 10% of her gross income to the United Way (a 50% organization). Eleanor, who is in the 24% marginal tax bracket, is considering the following alternatives for satisfying the contribution. Fair Market Value $23,000 $23,000 (1) Cash donation (2) Unimproved land held for six years ($3,000 basis) (3) Blue Corporation stock held for eight months ($3,000 basis) (4) Gold Corporation stock held for two years ($28,000 basis) $23,000 $23,000 Eleanor has asked you to help her decide which of the potential contributions listed above will be most advantageous tax-wise. Evaluate the four alternatives and complete a letter to Eleanor. Determine the amount of the charitable contribution for each option. Charitable Contribution $ 23,000 Cash donation Unimproved land held for six years ($3,000 basis) $ 23,000 Blue Corporation stock held for eight months ($3,000 basis) $ 3,000 Gold Corporation stock held for two years ($28,000 basis) $ 23,000 Young, Nellen, Hoffman, Raabe, & Maloney, CPA 5191 Natorp Boulevard Mason, OH 45040

Answer 1

If you have capital gain of $ 2000 or more this year, you can use entire loss.....................& carry over the remaining $2,000 loss to future years..

sale of stock loss will be = $28,000 - $23,000 = $ 5,000.

As per current provision capital loss of $ 5,000 can be adjusted against any capital gains. If capita gain not availabe then you can deduct $ 3,000 from other. Here if capital gain is $2,000 then we can deduct $2,000 from capital gain and remaining from other income. After set off of loss of $3 000 we will carry the remaining loss ($ 5,000 - $2,000) to future year.

Note: all answer given in the question are correct.