Charitable Contribution

Question 1

Samson, a lifelong Republican, contributed $10,000 to the senatorial campaign of Barry McBush, his fraternity brother at Southern Methodist University.

Answer 1

$0 - Political contributions are not qualifying charitable donations and are not deductible

Question 2

Delilah contributed $10,000 to Joe O’Kennedy so Joe could pay for an operation for one of his children.

Answer 2

$0
Contributions to individuals are not deductible, regardless of the circumstances. Deductions are only allowed for contributions to qualified charitable organizations
If she had given the money directly to the hospital it would had been deductible

Question 3

Samson and Delilah attended a charity ball hosted by their favorite church, St. Patrick’s Cathedral in New York City. The tickets cost $2,000 each, and the “value” of attending the ball was $500 each.

Answer 3

$3,000
The excess of the amount contributed ($2,000) over the fair value of the services provided ($500) is deductible. The total contribution is $3,000 because there were two tickets [($2,000 – $500) × 2 tickets].

Question 4

Samson donated a Claude Monet painting worth $12,000,000 to his local church. Samson had bought the painting several years ago when it was worth only $2,000,000.

Answer 4

Hold for more than a year and subject to 30% income
$5,000,000 * .30% = $1,500,000
$12,000,000 - $1,500,000 = $10,500,000 carryforward for 5 yrs

Question 5

Assume that Samson had contributed $2,500,000 in cash to the American Diabetes Association in addition to the Claude Monet painting in row 9, above. If Samson and Delilah made no other charitable contributions for the year, what is the amount of their charitable contributions deduction?

Answer 5

Cash contributions are subject to 60% of AGI limitations
$5,000,000 * .60% = $3,000,000 —- $2,500,000 allowed

Becker explanation:
The deduction for the cash contribution is calculated first, then the deduction for the appreciated LTCG property contribution. The $2,500,000 cash contribution to the American Diabetes Association is less than the 60 percent of AGI limitation for cash contributions to public charities ($5,000,000 AGI × 0.60 = $3,000,000), so the entire $2,500,000 can be deducted.

The amount of the contribution of the appreciated long-term capital gain (LTCG) property is its fair market value of $12,000,000. The deduction for the contribution of LTCG property is limited to the lesser of:

30% of AGI:
$5,000,000 AGI × 0.30 = $1,500,000

OR

50% of AGI reduced by deduction allowed for cash contribution:
$2,500,000 = $5,000,000 AGI × 0.50
– $2,500,000 Less: cash contribution
– $0 Less: ordinary income property contribution allowed
= $0 allowable deduction for the painting
The lesser of the two limits is $0, so no deduction is allowed for the contribution of LTCG property in the current year. The entire $12,000,000 contribution is carried forward for five years.