Question

Patrick has an adjusted gross income of $160,000 in the current year. He donated $30,000 in cash to a public charity, capital gain property with a basis of $15,000 and a fair market value of $40,000 to a public charity, and publicly traded stock with a basis of $20,000 and a fair market value of $35,000 to a private nonoperating foundation. The amount that Patrick can deduct for the stock donation to the private nonoperating foundation is ______.

Answer 1

Patrick can deduct the basis amount of the publicly traded stock, which is $20,000, for his donation to a private nonoperating foundation.

Step-by-step explanation:

The amount that Patrick can deduct for the stock donation to the private nonoperating foundation is limited. Under tax rules, when donating to such foundations, the deduction for donated appreciated property is usually limited to the donor's basis in the property rather than the fair market value. For publicly traded stock, this generally means that the donor can only deduct what they originally paid for the stock. Given that Patrick's basis in the publicly traded stock is $20,000, and since he’s donating to a private nonoperating foundation, $20,000 would be the deductible amount.

Answer 2

An$8,000

swer:

Step-by-step explanation:

Non-cash contributions of capital gain property are subject to limit of 30% of AGI = 30% * 160000 = $48,000

$40,000 in property to public charity is allowable deduction (Contribution to private non-operating foundation is further subject to a 30% limit)

Hence, allowable deduction of contribution to private non-operating foundation = 30% * AGI (Contribution subject to 30% limit) = $48,000 - $40,000 = $8,000