Elmore Eisner made the following contributions during the current tax year:
Cash to United Way $5,000
Land to Boy Scouts to be used as a summer camp: Cost 20,000 Fair market value 30,000
Painting to a 20 percent charity for permanent display in foundation's public gallery: Cost 5,000 Fair market value 7,000
Cash to individual families in need around town 3,000
a. Assuming Elmore's adjusted gross income is $80,000, what is his charitable contribution deduction for the year and carryover?
b. What is the charitable contribution and carryover if the cost and fair market value of the painting are $25,000 and $27,000, respectively?
Itemized deductions are the allowed reduction in the total gross income of the taxpayer that he or she can deduct. Directions reduce the taxable income which is ultimate lowers the income tax.
Answer and Explanation: 1
The charitable contribution deduction for the year is 50% of the AGI.
Charitable contribution deduction = $80,000 * 50%
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fromChapter 5 / Lesson 1
Deductions lower your taxable income and reduce the taxes you pay. This lesson explores the major types of itemized deductions which can save you tax dollars if they exceed the standard deduction.