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Charitable contribution - Donation of appreciated stock

Kelly has AGI of $100,000 in 2006. She contributes stock in Tulip Corp. (a publicly traded corp.) to a State University (a qualified charitable org.) The stock is worth $59000 & she acquired it as an investment 2 years ago at a cost of $44,000.

1. What is the total amount that kelly can deduct as a charitable contribution, assuming she carries over any disallowed contribution from 2006 to future years?

2. What is the maximum amount that kelly can deduct as a charitable contribution in 2006?

3. What factors should kelly consider in deciding how to treat the contribution for federal income tax purposes?

4. Assume Kelly dies in December 2006. What advice would you give the executor of her estate with regard to possible elections that can be made relative to the contribution?

Solution Preview

1. Donations of appreciated stock are limited to 30% of AGI instead of the normal total contribution limit of 50% of AGI. If I understand the question correctly, the total deduction allowable is $59,000, the fair market value of the securities. This is the amount before any limitations based on income.

2. The total amount of deduction allowable is $30,000 (100,000 x 30%) for 2006. The remaining $29,000 would carryover ...

Solution Summary

The four scenarios about donating appreciated property are discussed in detail in the solution including limitations and the rates of tax involved.

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