Dear Ms. Young:I have evaluated the proposed alternatives for your current year-end contribution to the United Way. I recommend that you sellthe Gold Corporation stock and donate the proceeds to the United Way. The four alternatives are discussed below.A donation of cash, the unimproved land, or the Gold stock will result in a $23,000 V charitable contribution deduction.Donation of the Blue Corporation stock will result in only a $3,000 V charitable contribution deduction.A direct contribution of the Gold Corporation stock will be a poorV decision from a tax perspective in that the decline invalue is notv deductible and the amount of the charitable contribution would be $23,000 V. If you sell theGold stock and give the proceeds to United Way, the donation of the proceeds will result in a $23,000 V charitablecontribution deduction. In addition, sale of the stock will result in a $5,000 V long-term capital loss. If you havecapital gains of $or more this year, you can use the entire loss in computing your current taxable income. If youhave no capital gains this year, you can deduct $of the capital loss this year and carry over the remaining$loss to future years.You should make the donation in time for ownership to change hands before the end of the year. Therefore, I recommend thatyou notify your broker immediately so that there will be no problem in completing the donation on a timely basis.Please let me know if you have any questions or would like to discuss my recommendation and the related analysis. Thank youfor consulting our firm on this matter. We look forward to serving you in the future.Sincerely,Nora Oldham, CPA Problem 10-36 (LO. 6, 8)In December of each year, Eleanor Young contributes 10% of her gross income to the United Way (a 50% organization). Eleanor, who is inthe 24% marginal tax bracket, is considering the following alternatives for satisfying the contribution.Fair Market Value(1) Cash donation$23,000(2) Unimproved land held for six years ($3,000 basis)$23,000(3) Blue Corporation stock held for eight months ($3,000 basis)$23,000(4) Gold Corporation stock held for two years ($28,000 basis)$23,000Eleanor has asked you to help her decide which of the potential contributions listed above will be most advantageous tax-wise. Evaluate thefour alternatives and complete a letter to Eleanor.Determine the amount of the charitable contribution for each option.CharitableContributionCash donation23,000Unimproved land held for six years ($3,000 basis)$23,000Blue Corporation stock held for eight months ($3,000 basis)3,000Gold Corporation stock held for two years ($28,000 basis)23,000 V

Cash contributions are deductible in the year in which they are aid, subject to AGI limitation…

e evaluated the proposed alternatives for your current year-end contribution to the United Way. I recommend that you old Corporation stock and donate the proceeds to the United Way. The four alternatives are discussed below. ation of cash, the unimproved land, or the Gold stock will result in a $ 23,000 charitable contribution ded ion of the Blue Corporation stock will result in only a $ 3,000 charitable contribution deduction. ct contribution of the Gold Corporation stock will be a poor decision from a tax perspective in that the declir is not deductible and the amount of the charitable contribution would be $ 23,000 v. If you sell t stock and give the proceeds to United Way, the donation of the proceeds will result in a $ 23,000 V charitab- bution deduction. In addition, sale of the stock will result in a $ 5,000 long-term capital loss. If you have al gains of $ or more this year, you can use the entire loss in computing your current taxable income.

e evaluated the proposed alternatives for your current year-end contribution to the United Way. I recommend that you old Corporation stock and donate the proceeds to the United Way. The four alternatives are discussed below. ation of cash, the unimproved land, or the Gold stock will result in a $ 23,000 charitable contribution ded ion of the Blue Corporation stock will result in only a $ 3,000 charitable contribution deduction. ct contribution of the Gold Corporation stock will be a poor decision from a tax perspective in that the declir is not deductible and the amount of the charitable contribution would be $ 23,000 v. If you sell t stock and give the proceeds to United Way, the donation of the proceeds will result in a $ 23,000 V charitab- bution deduction. In addition, sale of the stock will result in a $ 5,000 long-term capital loss. If you have al gains of $ or more this year, you can use the entire loss in computing your current taxable income.

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter10: Deductions And Losses: Certain Itemized Deductions

Section: Chapter Questions

Problem 36P

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