Marco, a calendar-year taxpayer, made the following charitable contributions in
ID: 2405660 • Letter: M
Question
Marco, a calendar-year taxpayer, made the following charitable contributions in the current year: Cash to the church $5,000 FMV; Unimproved land (with cost basis of $30,000) to the local college $70,000 FMV. The land had been held as an investment by Marco for 5 years. If Marco's AGI is $120,000 and if he wants to maximize his charitable contribution deduction in the current year, what is Marco's maximum allowable charitable contribution deduction for the current year?
A) $35,000
B) $41,000
C) $60,000
D) $75,000
Explanation / Answer
Marco's maximum allowable charitable contribution deduction for the current year woul be $ 41000
Calculation is as below:
Deduction for land is limited to 30% of AGI
= 30% X 120000 = 36000
Total allowable contribution should not exceed 50% of AGI
= 50% X 120000 = 60000
Particulars Total Amount ($) Allowable amount ($) Remarks Cash paid to Church 5000 5000 Cash donated to church is considered first and is fully deductible Land contribution 70000 (FMV) 36000Deduction for land is limited to 30% of AGI
= 30% X 120000 = 36000
TOTAL 41000Total allowable contribution should not exceed 50% of AGI
= 50% X 120000 = 60000