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    Charitable Contributions

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    Zeke made the following donations to qualified charitable organizations during 2007:
    Basis Fair Market Value
    Used clothing (all acquired
    before 2006) of taxpayer
    and his family $ 2,350 $ 675
    Stock in ABC, Inc., held as
    an investment for
    fifteen months 15,000 12,875
    Stock in MNO, Inc., held as
    an investment for eleven months 12,000 20,000
    Real estate held as an investment
    for two years 20,000 35,000
    The used clothing was donated to the Salvation Army; the other items of property were donated to Eastern State University. Both are qualified charitable organizations. Disregarding percentage limitations, Zeke's
    charitable contribution deduction for 2007 is:
    a. $55,225.
    b. $60,550.
    c. $70,025.
    d. $72,130.
    e. None of the above.

    Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations in 2007:
    Basis Fair Market Value
    Cash donation to Indiana State University $30,000 $ 30,000
    Unimproved land to the city of
    Terre Haute, Indiana 70,000 210,000
    The land had been held as an investment and was acquired 4 years ago. Shortly after receipt, the city of Terre Haute sold the land for $210,000. Karen's AGI is $450,000. The allowable charitable contribution deduction
    is:
    a. $84,000 if the reduced deduction election is not made.
    b. $100,000 if the reduced deduction election is not made.
    c. $165,000 if the reduced deduction election is not made.
    d. $170,000 if the reduced deduction election is made.
    e. None of the above.

    During 2007, Ralph made the following contributions to the University of Oregon (a qualified charitable organization):
    Cash $63,000
    Stock in Raptor, Inc. (a publicly traded corporation) 94,500
    Ralph acquired the stock in Raptor, Inc., as an investment fourteen months ago at a cost of $42,000. Ralph's AGI for 2007 is $189,000. What is Ralph's charitable contribution deduction for 2007?
    a. $56,700.
    b. $63,000.
    c. $94,500.
    d. $157,500.
    e. None of the above.

    In 2007, Cindy invested $100,000 for a 25% interest in a limited liability company (LLC) involved in an activity in which she is a material participant. The LLC reported losses of $340,000 in 2007 and $180,000 in 2008 with Cindy's share being $85,000 in 2007 and $45,000 in 2008. How much of the losses can Cindy deduct?
    a. $0 in 2007, $0 in 2008.
    b. $85,000 in 2007, $0 in 2008.
    c. $85,000 in 2007, $15,000 in 2008.
    d. $85,000 in 2007, $45,000 in 2008.
    e. None of the above.

    Which of the following decreases a taxpayer's at-risk amount?
    a. Cash and the adjusted basis of property contributed to the activity.
    b. Amounts borrowed for use in the activity for which the taxpayer is personally liable or has pledged as security property not used in the activity.
    c. Taxpayer's share of amounts borrowed for use in the activity that is qualified nonrecourse financing.
    d. Taxpayer's share of the activity's income.
    e. None of the above.

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    https://brainmass.com/business/accounting/charitable-contributions-207755

    Solution Preview

    1. Zeke
    The used clothing is taken at fair market value of $675
    The ABC stock is taken at fair market value $12,875
    The MNO stock with the short term gain is the adjusted basis of $12,000
    The real estate is taken at fair market value of $35,000
    Then the items are added together for a total of $60,550 which is answer B.

    2. Karen
    The addition of the two items at their respective fair ...

    Solution Summary

    This solution is in question and answer format on the topic of charitable contributions.

    $2.19

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