Henry’s adjusted gross income
Henry’s adjusted gross income is $50,000 in 2018. He donated apiece of artwork with a basis of $10,000 and a fair market value(FMV) of $25,000. He has owned the artwork for 10 years. Thecharity that Henry donated the artwork to is a public charity andwill display the art work in its art center. What is the maximumcharitable deduction in 2018 that Henry can take?
$0.
$10,000.
$15,000.
$25,000
Answer:
| As per the ruleslaid in Publication 526, Charitable Contribution and Publication561 | |||||||||
| with regard to thedetermination of of Value of donated property with considering therules | |||||||||
| and disclosure requirment ofpublication 1771 | |||||||||
| Deduction is allowed for acharitable contribution made to , or for the use of by way of cashor | |||||||||
| any another form, to thepublic organisations and as laid under Section 170 (C ) of | |||||||||
| Internal Revenue Code -deductions upto 50% of adjusted gross total income is allowed. | |||||||||
| With regard to otherorganisation the deductions upto 20 % or 30 % | |||||||||
| with limitations mayapply. | |||||||||
| In the present case, the artwork is donated to a public charity and hence 50% of adjusted grosstotal | |||||||||
| income is allowed asdeduction | |||||||||
| Therefore , maximumchartiable deduction in 2018 that | |||||||||
| Henry can take =Adjusted gross income x 50 % = $50000 x 50%=$25000 | |||||||||
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