The Hosta Trust reports gross rent income of $97,400, expenses attributable to the rents of $68,180, and tax-exempt interest from state bonds of $24,350. Under the trust agreement, the trustee is to pay 20% of the annual trust accounting income to the American Red Cross, a qualifying charitable organization.
What is Hosta Trust's charitable deduction?
Charitable contributions deductions
When a taxpayer contributes part of his/her income to a qualified tax-exempt organization, a specific tax deduction is allowable to lower that person's liability.
Answer and Explanation: 1
First, calculate the net income of Hosta Trust as shown below;
= Gross rent income + Interest from state bond - Expenses attributable to rents
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fromChapter 3 / Lesson 5
Learn what income tax liability is. Find out what taxable and adjusted gross income are, discover how to calculate tax liability, and examine common deductions.