During 2014, Siskin Corporation (a C corporation) had the following transactions

Question

During 2014, Siskin Corporation (a C corporation) had the following transactions

In June 2014 , Siskin made a contribution to a qualified charitable organization of $10,500 in a cash (not included in any of the items listed above).

a. How much if any, of the contributions can be claimed as a deduction for 2014?

b. What happens to any portion not deductible for 2014?

Income from operations $500,000 Expenses from operations $425,000 Dividends from domestic corporations (less than 20% ownership) 40,000 Dividends received deduction (70% x $40,000) $28,000 Unused short term capital loss from 2012 (there are no capital gains in 2013 and 2014)   2,500 NOL carryover rom 2013 40,000

Explanation / Answer

a. Contributions that can be claimed in 2014 is restricted to a maximum of 10% of taxable income

Taxable Income = $500,000 - $425,000 + $40000 - $28,000 = $87000

10% of taxable income = 10% of $87000 = $8700

Maximum deductions that can be claimed on charitable contributions =  $8700

b. The portion of ( 10500 - 8700) ; $1800 not deductible in 2014 would be carried on for 5 years and would be subject to the limit of 10% of taxable income every year.

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