Curly donated inventory (ordinary income property) to a university. He purchased the inventory seven months ago for $10,000, and on the date of the gift, it had a fair market value of $2,000. What is his maximum charitable contribution deduction for this donation if his AGI is $80,000?

Question

Mahoney

Business

30 January, 03:07

Curly donated inventory (ordinary income property) to a university. He purchased the inventory seven months ago for $10,000, and on the date of the gift, it had a fair market value of $2,000. What is his maximum charitable contribution deduction for this donation if his AGI is $80,000?

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Answers (1)

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Conner Walsh · Answer 1

The answer is: $2,000

Explanation:

The IRS allows charitable deductions for ordinary income property to a maximum of 50% of adjusted gross income (AGI). The goods donated should be recorded at the lesser value between basis cost or fair market value. In this case Curly can deduct up to $40,000 per year, if he donates something that is worth that amount.