Zeta Corporation reports the following results for 2006 and 2007:
Adjusted taxable income $180,000 $125,000
Charitable contributions (cash) 20,000 12,000.
The adjusted taxable income is before Zeta claims any charitable contributions deduction, NOL or capital loss carryback, dividends-received deduction, or U.S. production activities deduction.
a. How much is Zeta's charitable contributions deduction in 2006? In 2007?
b. What is Zeta's contribution carryover to 2008, if any?
Solution (see the attachment):
Computation of charitable contributions deduction in 2006 and 2007
a. 2006: Contribution limitation: = $180,000 x 0.10 = $18,000
Charitable contribution deduction limitations are analyzed for Zeta Corporation. The contribution carryover is determined.