Problem: Zeke made the following donations to qualified charitable organizations during 2007:
Basis Fair Market Value
Used clothing (all acquired
before 2006) of taxpayer
and his family $ 2,350 $ 675
Stock in ABC, Inc., held as
an investment for
fifteen months 15,000 12,875
Stock in MNO, Inc., held as
an investment for eleven months 12,000 20,000
Real estate held as an investment
for two years 20,000 35,000
The used clothing was donated to the Salvation Army; the other items of property were donated to Eastern State University. Both are qualified charitable organizations. Disregarding percentage limitations, Zeke's charitable contribution deduction for 2007 is:
a. $55,225.
b. $60,550.
c. $70,025.
d. $72,130.
e. None of the above.
Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations in 2007:
Basis Fair Market Value
Cash donation to Indiana State University $30,000 $ 30,000
Unimproved land to the city of
Terre Haute, Indiana 70,000 210,000
The land had been held as an investment and was acquired 4 years ago. Shortly after receipt, the city of Terre Haute sold the land for $210,000. Karen's AGI is $450,000. The allowable charitable contribution deduction is:
a. $84,000 if the reduced deduction election is not made.
b. $100,000 if the reduced deduction election is not made.
c. $165,000 if the reduced deduction election is not made.
d. $170,000 if the reduced deduction election is made.
e. None of the above.
During 2007, Ralph made the following contributions to the University of Oregon (a qualified charitable organization):
Cash $63,000
Stock in Raptor, Inc. (a publicly traded corporation) 94,500
Ralph acquired the stock in Raptor, Inc., as an investment fourteen months ago at a cost of $42,000. Ralph's AGI for 2007 is $189,000.
What is Ralph's charitable contribution deduction for 2007?
a. $56,700.
b. $63,000.
c. $94,500.
d. $157,500.
e. None of the above.
In 2007, Cindy invested $100,000 for a 25% interest in a limited liability company (LLC) involved in an activity in which she is a material participant. The LLC reported losses of $340,000 in 2007 and $180,000 in 2008 with Cindy's share being $85,000 in 2007 and $45,000 in 2008. How much of the losses can Cindy deduct?
a. $0 in 2007, $0 in 2008.
b. $85,000 in 2007, $0 in 2008.
c. $85,000 in 2007, $15,000 in 2008.
d. $85,000 in 2007, $45,000 in 2008.
e. None of the above.
Which of the following decreases a taxpayer's at-risk amount?
a. Cash and the adjusted basis of property contributed to the activity.
b. Amounts borrowed for use in the activity for which the taxpayer is personally liable or has pledged as security property not used in the activity.
c. Taxpayer's share of amounts borrowed for use in the activity that is qualified nonrecourse financing.
d. Taxpayer's share of the activity's income.
e. None of the above.