Federal Income Tax Charitable Contributions. 2 Contributions Problem 7 - 56

Federal Income Tax

Charitable Contributions

2

Contributions

• Problem 7 - 56

Determining the Contributions DeductionFor Gifts to PUBLIC Charities

Cash?

Yes

Deductible up to 50% of AGI *

No

Capital GainProperty?

Yes

No

Both tangibleand personal?

Is FMV <Adjusted Basis?

Yes

Deduct FMV up to 50% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

No

Yes

Used inexempt

function?

No

No Deduct FMVup to 30% of AGI *

Deduct Adjusted Basis up to 50% of AGI *

Yes

ChooseOne:

* Excess amounts may be carried forward for 5 years

Copyright © 2000 by M. Ray Gregg. All rights reserved.

YesDeduct FMV

up to 30% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

NoIs FMV <

Adjusted Basis?

Both tangibleand personal?

No

4

Choose one:

Deduct Basis

to 30% of AGI *

to 50% of AGI *

Deduct FMV

Problem 7 - 56

5

Choose one:

Deduct Basis

to 30% of AGI *

to 50% of AGI *

Deduct FMV$50,000

30% x $100,000 = $30,000

Problem 7 - 56

6

Choose one:

Deduct Basis

to 30% of AGI *

to 50% of AGI *

Deduct FMV

$40,000

50% x $100,000 = $50,000

Problem 7 - 56

7

Contributions

• Problem 7 - 56• Problem 7 - 54

Determining the Contributions DeductionFor Gifts to PUBLIC Charities

Cash?

Yes

Deductible up to 50% of AGI *

No

Capital GainProperty?

Yes

No

Both tangibleand personal?

Is FMV <Adjusted Basis?

Yes

Deduct FMV up to 50% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

No

Yes

Used inexempt

function?

No

No Deduct FMVup to 30% of AGI *

Deduct Adjusted Basis up to 50% of AGI *

Yes

ChooseOne:

* Excess amounts may be carried forward for 5 years

Copyright © 2000 by M. Ray Gregg. All rights reserved.

YesDeduct FMV

up to 30% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

NoIs FMV <

Adjusted Basis?

Both tangibleand personal?

9

Problem 7 - 54a. $40,000 FMV 30% limit

Determining the Contributions DeductionFor Gifts to PUBLIC Charities

Cash?

Yes

Deductible up to 50% of AGI *

No

Capital GainProperty?

Yes

No

Both tangibleand personal?

Is FMV <Adjusted Basis?

Yes

Deduct FMV up to 50% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

No

Yes

Used inexempt

function?

No

No Deduct FMVup to 30% of AGI *

Deduct Adjusted Basis up to 50% of AGI *

Yes

ChooseOne:

* Excess amounts may be carried forward for 5 years

Copyright © 2000 by M. Ray Gregg. All rights reserved.

YesDeduct FMV

up to 30% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

NoIs FMV <

Adjusted Basis?

11

Problem 7 - 54a. $40,000 FMV 30% limitb. $10,000 basis 50% limit

Determining the Contributions DeductionFor Gifts to PUBLIC Charities

Cash?

Yes

Deductible up to 50% of AGI *

No

Capital GainProperty?

Yes

No

Both tangibleand personal?

Is FMV <Adjusted Basis?

Yes

Deduct FMV up to 50% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

No

Yes

Used inexempt

function?

No

No Deduct FMVup to 30% of AGI *

Deduct Adjusted Basis up to 50% of AGI *

Yes

ChooseOne:

* Excess amounts may be carried forward for 5 years

Copyright © 2000 by M. Ray Gregg. All rights reserved.

YesDeduct FMV

up to 30% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

NoIs FMV <

Adjusted Basis?

13

Problem 7 - 54a. $40,000 FMV 30% limitb. $10,000 basis 50% limitc. $100,000 FMV 30% limit

Determining the Contributions DeductionFor Gifts to PUBLIC Charities

Cash?

Yes

Deductible up to 50% of AGI *

No

Capital GainProperty?

Yes

No

Both tangibleand personal?

Is FMV <Adjusted Basis?

Yes

Deduct FMV up to 50% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

No

Yes

Used inexempt

function?

No

No Deduct FMVup to 30% of AGI *

Deduct Adjusted Basis up to 50% of AGI *

Yes

ChooseOne:

* Excess amounts may be carried forward for 5 years

Copyright © 2000 by M. Ray Gregg. All rights reserved.

YesDeduct FMV

up to 30% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

NoIs FMV <

Adjusted Basis?

15

Problem 7 - 54a. $40,000 FMV 30% limitb. $10,000 basis 50% limitc. $100,000 FMV 30% limitd. $50,000 basis 50% limit

Determining the Contributions DeductionFor Gifts to PUBLIC Charities

Cash?

Yes

Deductible up to 50% of AGI *

No

Capital GainProperty?

Yes

No

Both tangibleand personal?

Is FMV <Adjusted Basis?

Yes

Deduct FMV up to 50% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

No

Yes

Used inexempt

function?

No

No Deduct FMVup to 30% of AGI *

Deduct Adjusted Basis up to 50% of AGI *

Yes

ChooseOne:

* Excess amounts may be carried forward for 5 years

Copyright © 2000 by M. Ray Gregg. All rights reserved.

YesDeduct FMV

up to 30% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

NoIs FMV <

Adjusted Basis?

17

Problem 7 - 54a. $40,000 FMV 30% limitb. $10,000 basis 50% limitc. $100,000 FMV 30% limitd. $50,000 basis 50% limite. $500 basis 50% limit

18

Contributions

• Problem 7 – 56 • Problem 7 – 54 • Problem 7 – 61

19

Problem 7 - 61Sales Price 30,000

If sold thencash donated

20

Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000

If sold thencash donated

21

Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000x CG tax rate 15%

If sold thencash donated

22

Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000x CG tax rate 15%Additional Tax 3,000

If sold thencash donated

23

Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000x CG tax rate 15%Additional Tax 3,000

Charitable Contribution 30,000

If sold thencash donated

24

Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000x CG tax rate 15%Additional Tax 3,000

Charitable Contribution 30,000x Marginal Rate 35%

If sold thencash donated

25

Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000x CG tax rate 15%Additional Tax 3,000

Charitable Contribution 30,000x Marginal Rate 35%Tax Savings 10,500

If sold thencash donated

26

Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000x CG tax rate 15%Additional Tax 3,000

Charitable Contribution 30,000x Marginal Rate 35%Tax Savings 10,500

Net Tax Savings -7,500

If sold thencash donated

27

Problem 7 - 61If stockdonated

Determining the Contributions DeductionFor Gifts to PUBLIC Charities

Cash?

Yes

Deductible up to 50% of AGI *

No

Capital GainProperty?

Yes

No

Both tangibleand personal?

Is FMV <Adjusted Basis?

Yes

Deduct FMV up to 50% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

No

Yes

Used inexempt

function?

No

No Deduct FMVup to 30% of AGI *

Deduct Adjusted Basis up to 50% of AGI *

Yes

ChooseOne:

* Excess amounts may be carried forward for 5 years

Copyright © 2000 by M. Ray Gregg. All rights reserved.

YesDeduct FMV

up to 30% of AGI *

Deduct Adjusted Basisup to 50% of AGI *

NoIs FMV <

Adjusted Basis?

29

Choose one:

Deduct Basis

to 30% of AGI *

to 50% of AGI *

Deduct FMV$30,000

Problem 7 - 61If stockdonated

30

Problem 7 - 61If stockdonated

Charitable Contribution 30,000

31

Problem 7 - 61If stockdonated

Charitable Contribution 30,000x Marginal Rate 35%

32

Problem 7 - 61If stockdonated

Charitable Contribution 30,000x Marginal Rate 35%Tax Savings 10,500

33

Tax Savings 10,500

Problem 7 - 61

If sold then cash donated:

If stock donated:

Net Tax Savings 7,500

40

Itemized Deductions

• Medical

• Taxes• Interest• Charitable

Contributions• Casualty Losses• Other

41