Federal Income Tax
Charitable Contributions
Contributions
• Problem 7 - 56
2
Determining the Contributions Deduction
For Gifts to PUBLIC Charities
Deduct FMV
up to 30%
* of AGI
Is FMV <
Adjusted Basis?
Deductible up to 50% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Used in
exempt
function?
BothBothtangible
tangible
and personal?
and personal?
Cash?
Choose
One:
Deduct FMV
up to 30% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Capital Gain
Property?
Deduct FMV up to 50% of AGI *
Is FMV <
Adjusted Basis?
* Excess amounts may be
carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
Deduct Adjusted Basis
up to 50% of AGI *
Problem 7 - 56
Choose one:
Deduct FMV
to 30% of AGI *
Deduct Basis
to 50% of AGI *
4
Problem 7 - 56
Choose one:
$50,000
Deduct FMV
to 30% of AGI *
30% x $100,000 = $30,000
Deduct Basis
to 50% of AGI *
5
Problem 7 - 56
Choose one:
Deduct FMV
to 30% of AGI *
$40,000
Deduct Basis
to 50% of AGI *
50% x $100,000 = $50,000
6
Contributions
• Problem 7 - 56
• Problem 7 - 54
7
Determining the Contributions Deduction
For Gifts to PUBLIC Charities
Deduct FMV
up to 30%
* of AGI
Is FMV <
Adjusted Basis?
Deductible up to 50% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Used in
exempt
function?
BothBothtangible
tangible
and personal?
and personal?
Cash?
Choose
One:
Deduct FMV
up to 30% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Capital Gain
Property?
Deduct FMV up to 50% of AGI *
Is FMV <
Adjusted Basis?
* Excess amounts may be
carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
Deduct Adjusted Basis
up to 50% of AGI *
Problem 7 - 54
a. $40,000 FMV
30% limit
9
Determining the Contributions Deduction
For Gifts to PUBLIC Charities
Deduct FMV
up to 30%
* of AGI
Is FMV <
Adjusted Basis?
Deductible up to 50% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Used in
exempt
function?
Cash?
Both tangible
and personal?
Choose
One:
Deduct FMV
up to 30% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Capital Gain
Property?
Deduct FMV up to 50% of AGI *
Is FMV <
Adjusted Basis?
* Excess amounts may be
carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
Deduct Adjusted Basis
up to 50% of AGI *
Problem 7 - 54
a. $40,000 FMV
b. $10,000 basis
30% limit
50% limit
11
Determining the Contributions Deduction
For Gifts to PUBLIC Charities
Deduct FMV
up to 30%
* of AGI
Is FMV <
Adjusted Basis?
Deductible up to 50% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Used in
exempt
function?
Cash?
Both tangible
and personal?
Choose
One:
Deduct FMV
up to 30% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Capital Gain
Property?
Deduct FMV up to 50% of AGI *
Is FMV <
Adjusted Basis?
* Excess amounts may be
carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
Deduct Adjusted Basis
up to 50% of AGI *
Problem 7 - 54
a. $40,000 FMV
b. $10,000 basis
c. $100,000 FMV
30% limit
50% limit
30% limit
13
Determining the Contributions Deduction
For Gifts to PUBLIC Charities
Deduct FMV
up to 30%
* of AGI
Is FMV <
Adjusted Basis?
Deductible up to 50% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Used in
exempt
function?
Cash?
Both tangible
and personal?
Choose
One:
Deduct FMV
up to 30% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Capital Gain
Property?
Deduct FMV up to 50% of AGI *
Is FMV <
Adjusted Basis?
* Excess amounts may be
carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
Deduct Adjusted Basis
up to 50% of AGI *
Problem 7 - 54
a.
b.
c.
d.
$40,000 FMV
$10,000 basis
$100,000 FMV
$50,000 basis
30%
50%
30%
50%
limit
limit
limit
limit
15
Determining the Contributions Deduction
For Gifts to PUBLIC Charities
Deduct FMV
up to 30%
* of AGI
Is FMV <
Adjusted Basis?
Deductible up to 50% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Used in
exempt
function?
Cash?
Both tangible
and personal?
Choose
One:
Deduct FMV
up to 30% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Capital Gain
Property?
Deduct FMV up to 50% of AGI *
Is FMV <
Adjusted Basis?
* Excess amounts may be
carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
Deduct Adjusted Basis
up to 50% of AGI *
Problem 7 - 54
a.
b.
c.
d.
e.
$40,000 FMV
$10,000 basis
$100,000 FMV
$50,000 basis
$500 basis
30%
50%
30%
50%
50%
limit
limit
limit
limit
limit
17
Contributions
• Problem 7 – 56
• Problem 7 – 54
• Problem 7 – 61
18
If sold then
cash donated
Problem 7 - 61
Sales Price
30,000
19
If sold then
cash donated
Problem 7 - 61
Sales Price
Basis
LT Capital Gain
30,000
10,000
20,000
20
If sold then
cash donated
Problem 7 - 61
Sales Price
Basis
LT Capital Gain
x CG tax rate
30,000
10,000
20,000
15%
21
If sold then
cash donated
Problem 7 - 61
Sales Price
Basis
LT Capital Gain
x CG tax rate
Additional Tax
30,000
10,000
20,000
15%
3,000
22
If sold then
cash donated
Problem 7 - 61
Sales Price
Basis
LT Capital Gain
x CG tax rate
Additional Tax
30,000
10,000
20,000
15%
Charitable Contribution
30,000
3,000
23
If sold then
cash donated
Problem 7 - 61
Sales Price
Basis
LT Capital Gain
x CG tax rate
Additional Tax
30,000
10,000
20,000
15%
Charitable Contribution
x Marginal Rate
30,000
35%
3,000
24
If sold then
cash donated
Problem 7 - 61
Sales Price
Basis
LT Capital Gain
x CG tax rate
Additional Tax
30,000
10,000
20,000
15%
Charitable Contribution
x Marginal Rate
Tax Savings
30,000
35%
3,000
10,500
25
If sold then
cash donated
Problem 7 - 61
Sales Price
Basis
LT Capital Gain
x CG tax rate
Additional Tax
30,000
10,000
20,000
15%
Charitable Contribution
x Marginal Rate
Tax Savings
30,000
35%
Net Tax Savings
3,000
10,500
-7,500
26
If stock
donated
Problem 7 - 61
27
Determining the Contributions Deduction
For Gifts to PUBLIC Charities
Deduct FMV
up to 30%
* of AGI
Is FMV <
Adjusted Basis?
Deductible up to 50% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Used in
exempt
function?
Cash?
Both tangible
and personal?
Choose
One:
Deduct FMV
up to 30% of AGI *
Deduct Adjusted Basis
up to 50% of AGI *
Capital Gain
Property?
Deduct FMV up to 50% of AGI *
Is FMV <
Adjusted Basis?
* Excess amounts may be
carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
Deduct Adjusted Basis
up to 50% of AGI *
If stock
donated
Problem 7 - 61
Choose one:
$30,000
Deduct FMV
to 30% of AGI *
Deduct Basis
to 50% of AGI *
29
If stock
donated
Problem 7 - 61
Charitable Contribution
30,000
30
If stock
donated
Problem 7 - 61
Charitable Contribution
x Marginal Rate
30,000
35%
31
If stock
donated
Problem 7 - 61
Charitable Contribution
x Marginal Rate
Tax Savings
30,000
35%
10,500
32
Problem 7 - 61
If sold then cash donated:
Net Tax Savings
7,500
If stock donated:
Tax Savings
10,500
33
Itemized Deductions
• Medical
•
•
•
•
•
Taxes
Interest
Charitable Contributions
Casualty Losses
Other
40
41