Rita, a calendar year taxpayer, made the following charitable contributions in 2

Question

Rita, a calendar year taxpayer, made the following charitable contributions in 2015:

                                                                        Basis                                        Fair Market Value

Cash donation to church                                 $10,000                                   $10,000

Unimproved land to the city of

Emporia, Kansas                                 $20,000                                   60,000

The land had been held as investment and was acquired 10 years ago. Shortly after receipt, the city of Emporia sold the land for $80,000. If Rita’s AGI is 100,000, the allowable charitable continuation deduction is?

Explanation / Answer

Answer: $10,000 (cash) + $30,000 (30% X $100,000 AGI) = $40,000. The long-term capital gain property is limited to 30% of $100,000 AGI, or $30,000. The carryover to the next five years is $30,000 [$60,000 (FMV of the land) – $30,000 (deduction allowed )]. If the reduced deduction election is made, the deduction becomes $30,000 [$10,000 (cash) + $20,000 (basis of land)].

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