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 Topic: Charitable contributions (sorry again) ( Topic Closed)
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Aznanalyst83
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Joined: 10 May 2009
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Posts: 241
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| Posted: 14 Jul 2009 at 00:09 | IP Logged
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Your client, Mr. Carlin, owns a piece of artwork (purchased 20 years ago) with a basis of $20,000 and a fair market value of $70,000. The client’s adjusted gross income (AGI) for 20X6 is projected to be $100,000. Mr. Carlin would like to consider donating the artwork to a public charity (50%-type) in 20X6 and has asked you, his CPA, to provide him with a memo regarding the tax ramifications of the potential donation.
In a memorandum to Mr. Carlin, explain the tax ramifications of his potential contribution of the artwork to a public charity, considering AGI limitations on deductibility, taxability of the capital appreciation, and carryover provisions.
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This was from the essay on one of Becker's CDs.
My question is the public charity (50% type)
I thought for most donations, it does not matter where you donate (as long as it is a qualified charity), the amount you can deduct is 50% of AGI max a year, at the rate of 50% for cash and 30% for non-cash items (art, stock, securities, etc)
So if I have an AGI of 100,000, the max I can deduct is 50,000
This can be a combination of
1) Cash (I.E 100,000)
2) Art (say, an $100,000 long term item X 30% making it 30,000) then + 40,000 cash.
3) Art with value 150,000+
then whats left of the balance goes into the next 5 years...
Then how does where I donate matter?
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bryris
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| Posted: 14 Jul 2009 at 00:27 | IP Logged
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There are 50% type organization and "other than 50%" organizations.
The 50% organizations are public in nature and include churches, educational institutions, hospitals, etc.
If giving to a 50% org:
Cash, tangible property directly related to charitable purpose, and ordinary income property (inventory) is limited to 50% AGI. Capital gain property (such as art) is subject to 30% AGI -- assuming you use FMV as the amount donated. If you chose to utilize A/B instead, you are back to the 50% AGI limit.
If you give to an "other than 50%" org, then everything is limited to 30% AGI, except CG prop is 20% AGI (just like the above 30% special rule).
However, if you give X to 50% organizations, you must calculate 30% AGI, then compare the capital gain property given to non 50% charities, and the amount deductible is limited to the difference (30%AGI less stuff given to 50% orgs) if less than the 20% AGI limit.
More info: http://www.irs.gov/pub/irs-pdf/p526.pdf
Gotta love this stuff!!!
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