In December of each year, Eleanor Young contributes 10% of her gross income to the United Way (a 50% organization). Eleanor, who is in t the 24% marginal tax bracket, is considering the following alternatives for satisfying the contribution. (1) Cash donation (2) Unimproved land held for six years ($21,210 basis) (3) Blue Corporation stock held for eight months ($21,210 basis) (4) Gold Corporation stock held for two years ($169,680 basis) Fair Market Value $141,400 $141,400 $141,400 $141,400 Eleanor has asked you to help her decide which of the potential contributions listed above will be most advantageous tax-wise. Evaluate the four alternatives and complete a letter to Eleanor.
In December of each year, Eleanor Young contributes 10% of her gross income to the United Way (a 50% organization). Eleanor, who is in t the 24% marginal tax bracket, is considering the following alternatives for satisfying the contribution. (1) Cash donation (2) Unimproved land held for six years ($21,210 basis) (3) Blue Corporation stock held for eight months ($21,210 basis) (4) Gold Corporation stock held for two years ($169,680 basis) Fair Market Value $141,400 $141,400 $141,400 $141,400 Eleanor has asked you to help her decide which of the potential contributions listed above will be most advantageous tax-wise. Evaluate the four alternatives and complete a letter to Eleanor.
Chapter10: Deductions And Losses: Certain Itemized Deductions
Section: Chapter Questions
Problem 36P
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Transcribed Image Text:In December of each year, Eleanor Young contributes 10% of her gross income to the United Way (a 50% organization). Eleanor, who is in
the 24% marginal tax bracket, is considering the following alternatives for satisfying the contribution.
Fair Market Value
$141,400
$141,400
$141,400
$141,400
(1) Cash donation
(2) Unimproved land held for six years ($21,210 basis)
(3) Blue Corporation stock held for eight months ($21,210 basis)
(4) Gold Corporation stock held for two years ($169,680 basis)
Eleanor has asked you to help her decide which of the potential contributions listed above will be most advantageous tax-wise. Evaluate the
four alternatives and complete a letter to Eleanor
Determine the amount of the charitable contribution for each option.
Cash donation
Unimproved land held for six years ($21,210 basis)
Blue Corporation stock held for eight months ($21,210 basis)
Gold Corporation stock held for two years ($169,680 basis)
Charitable
Contribution
141,400 ✔
120,190 X
21,210
28,280 X
Transcribed Image Text:Dear Ms. Young:
I have evaluated the proposed alternatives for your current year-end contribution to the United Way. I recommend that you sell
the Gold Corporation stock and donate the proceeds to the United Way. The four alternatives are discussed below.
A donation of cash, the unimproved land, or the Gold stock will result in a $
Donation of the Blue Corporation stock will result in only a s
21,210
A direct contribution of the Gold Corporation stock will be a poor
value is not
Gold stock and give the proceeds to United Way, the donation of the proceeds will result in a $
contribution deduction. In addition, sale of the stock will result in a s
141,400✔ charitable contribution deduction.
charitable contribution deduction.
✓decision from a tax perspective in that the decline in
✓deductible and the amount of the charitable contribution would be s 28,280 X. If you sell the
28,280 X charitable
3,000 X long-term capital loss. If you have.
3,000 X or more this year, you can use the entire loss in computing your current taxable income. If
3,000 of the capital loss this year and carry over the
capital gains of $
you have no capital gains this year, you can deduct $
remaining s
1,500 X loss to future years.
You should make the donation in time for ownership to change hands before the end of the year. Therefore, I recommend that
you notify your broker immediately so that there will be no problem in completing the donation on a timely basis.
Partner
Please let me know if you have any questions or would like to discuss my recommendation and the related analysis. Thank you
for consulting our firm on this matter. We look forward to serving you in the future.
Sincerely,
Nora Oldham, CPA
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