Itemized Deductions-Charitable Contributions Flashcards
(21 cards)
What are the main types of charities for deduction purposes?
Public charities, private operating foundations, and private nonoperating foundations
What is a public charity?
Organizations like churches, schools, donor-advised funds, and private operating foundations
What is a private nonoperating foundation?
Typically a family foundation that makes grants to other charities
What are the two main types of charitable donations?
Cash and property.
What are the categories of property for donation purposes?
Ordinary income property, short-term capital gain property, long-term capital gain property, tangible property, intangible property, real property
What is ordinary income property?
Property where sale would result in ordinary income, including inventory, assets held less than 1 year, and property subject to depreciation recapture
What is long-term capital gain property?
Property held for more than 1 year
What is the AGI deduction limit for cash contributions to public charities?
60% of AGI
What is the AGI deduction limit for property contributions to public charities?
50% of AGI for ordinary income property (limited to basis)
30% of AGI for FMV of long-term capital gain property
What is the deduction limit for donations to private nonoperating foundations?
Generally 30% of AGI for cash; 20% of AGI for appreciated property.
What happens if your charitable deduction exceeds the AGI limit?
The excess can be carried forward up to 5 years, subject to the same AGI limits each year
What is the special election for certain long-term capital gain property?
Donor may elect to deduct the adjusted basis (instead of FMV) to use a higher AGI ceiling (50% instead of 30%)
For tangible property, when can you deduct FMV?
If the charity uses the property in its charitable purpose for at least 2 years
What is the deduction if the charity does not use the tangible property for its charitable purpose?
Deduction is limited to the donor’s basis, not FMV.
What documentation is required for non-cash donations over $250?
Written acknowledgment from the charity
What is required for non-cash donations over $5,000?
Written acknowledgment and a qualified appraisal
Name some contributions that are not deductible.
Donations to individuals, political groups, social clubs, or for personal benefit
If a client donates $50,000 in cash to a public charity and has AGI of $70,000, how much is deductible this year?
$42,000 (60% of AGI); the remaining $8,000 can be carried forward up to 5 years
If a client donates stock held for 6 months (FMV $10,000, basis $8,000) to a public charity, what is the deductible amount?
$8,000 (basis), up to 50% of AGI
Donor gives a sculpture (held >1 year, FMV $30,000, basis $10,000) to a museum that will display it. What are the deduction options?
Deduct $30,000 (FMV, 30% AGI limit) or $10,000 (basis, 50% AGI limit) if special election is made.
Donor gives a painting (held >1 year, FMV $25,000, basis $5,000) to a charity that sells it. What is the deduction?
$5,000 (basis), up to 50% of AGI
