Your client is in the top marginal tax bracket and wants to donate $10,000 to th

Question

Your client is in the top marginal tax bracket and wants to donate $10,000 to the American Heart Association.The assets he is considering using to make the donation include $10,000 cash,100 shares of Apple stock worth $5,000 that he paid $1,000 for three years ago and inventory in business that he could sell that has a fair market value of $5,000 that he paid $7,000 for. As his tax accountant he has come to you seeking advice on the most tax advantage way to make the donation. What advice would you give him and why?

Explanation / Answer

He should donate inventory as he will be able to deduct the loss of $2000 from the gross income which will save the tax, and 500 he should pay in cash because if he donate the stock he will have to pay the capital gain tax which would be the additional burden on him.

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.