instructions : Choose the best multiple choice answer and explain why you chose
ID: 2580685 • Letter: I
Question
instructions : Choose the best multiple choice answer and explain why you chose the answer. MUST provide 2-3 sentence brief explanation and show all work. All sources must be noted.
1.1.15 Part A. Jasie owned stock in Ame Corporation that she donated to a university (a qualified charitable organization) on September 7, 2016. What is the amount of Jasie’s charitable contribution deduction assuming that she had purchased the stock for $24,400 on October 24, 2015, and the stock had a value of $37,300 when she made the donation?
a.
$7,100.
b.
$24,400.
c.
$21,100.
d.
$38,200.
e.
None of the above.
1.16.Part B In 2015, Pet invests $200,000 for a 20% partnership interest in an activity in which she is a material participant. In 2016 she invests an additional $10,000. The partnership reports losses of $600,000 in 2015 and $700,000 in 2016. Pet’s share of the partnership’s losses is $120,000 in 2015 and $140,000 in 2016. How much of the losses can Pet deduct?
a.
$120,000 in 2015 and $90,000 in 2016.
b.
$120,000 in 2015 and $140,000 in 2016.
c.
$200,000 in 2015 and $10,000 in 2016.
d.
$210,000 in 2015 and $0 in 2016.
e.
None of the above.
a.
$7,100.
b.
$24,400.
c.
$21,100.
d.
$38,200.
e.
None of the above.
Explanation / Answer
Solution:
1.15) Calculation of the Amount of Jaise's Charitable Contribution Deduction:
The Amount of Jaise's Charitable Contribution is equals to the Fair Market Value of the Property Less of the Amount of Ordinary Income that have to be Reported if the Property is Sold. In Most of the Instances, the Deduction is Limited to the Adjusted Basis of the Property to the Donor.
Here, in this Case Jaise's have Recognized the Short Term Capital Gain of the Amount ($37,200 - $24,400) = $12,900. Thus, the Short Term Capital Gain is Treated as the Ordinary Income Property for Charitable Contribution Purposes. Therefore, the Jaise's Chartiable Contribution Deduction is Limited to the Property Adjusted Basis of $24,400.
Therefore, the Right Option is b) $24,400.
1.16) Determining that How Much of the losses can Pet deduct:
Pet's Losses are Not Subject to the Passive Loss Limitations because Pet is a Material Participant in the Activity. The Threat-Risk Rules Limits to the Pet Losses of $200,000, of the Amount that Pet Invested in the Partnership Interest.
Therefore, the Right Option is e) None of the Above.
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