Calculating Charitable Contribution Deduction

Question 1

What is the maximum amount of the charitable contribution deduction?

Answer 1

The lesser of the amount of the charitable contribution or 10% of taxable income before certain deductions

The specific deductions to consider are: (i) charitable contribution deduction, (ii) dividends received deduction, and (iii) any capital loss carryback.

Question 2

What deductions are considered when calculating the taxable income limitation for charitable contributions?

Answer 2

Charitable contribution deduction, dividends received deduction, capital loss carryback

Net operating loss carryovers are also deducted.

Question 3

If the preliminary taxable income is $160,000, what is 10% of this amount?

Answer 3

$16,000

Question 4

What is the amount of the charitable contribution deduction in this scenario?

Answer 4

$15,000

This is the lesser of the $15,000 charitable contribution or $16,000 (10% of $160,000).

Question 5

What is the corporate taxable income after deducting the charitable contribution?

Answer 5

$145,000

This is calculated as $160,000 preliminary taxable income less the $15,000 charitable contribution deduction.

Question 6

Fill in the blank: The charitable contribution deduction is limited to _____ of taxable income before certain deductions.

Answer 6

10%