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Federal Income Tax Charitable Contributions. 2 Itemized Deductions Medical Taxes Interest Charitable Contributions Casualty Losses Other.

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Presentation on theme: "Federal Income Tax Charitable Contributions. 2 Itemized Deductions Medical Taxes Interest Charitable Contributions Casualty Losses Other."— Presentation transcript:

1 Federal Income Tax Charitable Contributions

2 2 Itemized Deductions Medical Taxes Interest Charitable Contributions Casualty Losses Other

3 3 Charitable Contributions A.Alice has AGI of $22,000. During the year she made the following cash contributions: Girl Scouts$3,000 Local Church6,300 Oral Roberts University3,000 Tulsa University300 University of Texas300 University of Oklahoma 300 $13,200 In each of the following independent cases, indicate the amount that may be deducted as charitable contributions. Limited to 50% of AGI$11,000 Excess carried over for 5 years

4 4 Charitable Contributions B.Bernard had AGI of $16,500. During the year he made the following cash contributions: Boy Scouts$5,000 Democratic Party2,000 Needy family in neighborhood400 American Legion200 London School of Economics (England)800 Local Hospital 1,000 Republican

5 5 C.Cinde operates a retail furniture store. In July of this year she contributed to the local hospital a number of items of furniture (tables, chairs, and sofas) from her merchandise inventory. These items had cost her $3,800 but had a normal retail value of $7,400. Cindes AGI this year was $20,000. Charitable Contributions

6 Determining the Contributions Deduction For Gifts to PUBLIC Charities Cash? Yes Deductible up to 50% of AGI * No Capital Gain Property? Yes No Both tangible and personal? Is FMV < Adjusted Basis? Yes Deduct FMV up to 50% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Yes Used in exempt function? No Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * Yes Choose One: * Excess amounts may be carried forward for 5 years Copyright © 2000 by M. Ray Gregg. All rights reserved. Yes Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Is FMV < Adjusted Basis?

7 Determining the Contributions Deduction For Gifts to PUBLIC Charities Cash? Yes Deductible up to 50% of AGI * No Capital Gain Property? Yes No Both tangible and personal? Is FMV < Adjusted Basis? Yes Deduct FMV up to 50% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Yes Used in exempt function? No Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * Yes Choose One: * Excess amounts may be carried forward for 5 years Copyright © 2000 by M. Ray Gregg. All rights reserved. Yes Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Is FMV < Adjusted Basis? Cash? Generally… Personal use Held > 1 year Is FMV < Adjusted Basis? Deduct Adjusted Basis Up to 50% of AGI No

8 8 C.Cinde operates a retail furniture store. In July of this year she contributed to the local hospital a number of items of furniture (tables, chairs, and sofas) from her merchandise inventory. These items had cost her $3,800 but had a normal retail value of $7,400. Cindes AGI this year was $20,000. Charitable Contributions Deduct Adjusted Basis Up to 50% of AGI

9 9 D.Dewayne purchased five tickets from the Boy Scouts. These tickets were to a local benefit performance of the city symphony, with all proceeds going to the Scouts. Normal cost of Charitable Contributions these tickets would have been $10 each, but because they were for a benefit, the cost of $15 each. Dewayne and his family attended the performance, using all five tickets. 5 x ($15 – 10) = $25

10 10 D.Assume the same facts except Dewayne bought the tickets as a purely charitable gesture with the intent of throwing them away – and he did so. Charitable Contributions 5 x ($15 – 10) = $25

11 11 E.Eugene is active in the Boy Scouts. During the past year he served as a scoutmaster. At the end of the year he calculated that he had spent $80 for various scout activities such as fund-raising drives. In ad- Charitable Contributions dition, he had driven his automobile an estimated 300 miles in connection with scout work. He also had lost 38 working hours from his job with a loss in pay of $820.

12 12 dition, he had driven his automobile an estimated 300 miles in connection with scout work. He also had lost 38 working hours from his job with a loss in pay of $820. E.Eugene is active in the Boy Scouts. During the past year he served as a scoutmaster. At the end of the year he calculated that he had spent $80 for various scout activities such as fund-raising drives. In ad- Charitable Contributions

13 13 Automobile Expenses Business$.565pg 9 – 11 Moving$.24pg 9 – 20 Medical$.24pg 7 – 4 Charitable Contribution $.?? * agreement

14 14 Automobile Expenses Business$.565pg 9 – 11 Moving$.24pg 9 – 20 Medical$.24pg 7 – 4 Charitable Contribution $.14 pg 7 – 25 Note: Was $.14 last eight years as well.

15 15 dition, he had driven his automobile an estimated 300 miles in connection with scout work. He also had lost 38 working hours from his job with a loss in pay of $820. E.Eugene is active in the Boy Scouts. During the past year he served as a scoutmaster. At the end of the year he calculated that he had spent $80 for various scout activities such as fund-raising drives. In ad- Charitable Contributions X $.14

16 16 dition, he had driven his automobile an estimated 300 miles in connection with scout work. He also had lost 38 working hours from his job with a loss in pay of $820. E.Eugene is active in the Boy Scouts. During the past year he served as a scoutmaster. At the end of the year he calculated that he had spent $80 for various scout activities such as fund-raising drives. In ad- Charitable Contributions X $.14

17 17 G.Gary owned 1,000 shares of X Corporation stock for which he paid $10,000 in During the current year he contributed 600 shares of this stock to the First Church of Histown. On the date of the contribution, the shares had a market price of $25 per share. Garys AGI this year was $25,000. Charitable Contributions

18 Determining the Contributions Deduction For Gifts to PUBLIC Charities Cash? Yes Deductible up to 50% of AGI * No Capital Gain Property? Yes No Both tangible and personal? Is FMV < Adjusted Basis? Yes Deduct FMV up to 50% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Yes Used in exempt function? No Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * Yes Choose One: * Excess amounts may be carried forward for 5 years Copyright © 2000 by M. Ray Gregg. All rights reserved. Yes Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Is FMV < Adjusted Basis? Cash? Generally… Personal use Held > 1 year Both tangible and personal? Yes No

19 19 Tangible? No

20 Determining the Contributions Deduction For Gifts to PUBLIC Charities Cash? Yes Deductible up to 50% of AGI * No Capital Gain Property? Yes No Both tangible and personal? Is FMV < Adjusted Basis? Yes Deduct FMV up to 50% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Yes Used in exempt function? No Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * Yes Choose One: * Excess amounts may be carried forward for 5 years Copyright © 2000 by M. Ray Gregg. All rights reserved. Yes Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Is FMV < Adjusted Basis? Both tangible and personal?

21 21 Personal = non-business = non - real vs

22 22 Real Estate

23 23 Real Estate Realtor Real-a-torRealtor

24 24 Personal = non-business = non - real vs

25 Determining the Contributions Deduction For Gifts to PUBLIC Charities Cash? Yes Deductible up to 50% of AGI * No Capital Gain Property? Yes No Both tangible and personal? Is FMV < Adjusted Basis? Yes Deduct FMV up to 50% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Yes Used in exempt function? No Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * Yes Choose One: * Excess amounts may be carried forward for 5 years Copyright © 2000 by M. Ray Gregg. All rights reserved. Yes Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Is FMV < Adjusted Basis? Both tangible and personal? No

26 26 Choose one: Deduct Basis to 30% of AGI * to 50% of AGI * Deduct FMV

27 27 to 30% of AGI * Deduct FMV Choose one: Deduct Basis to 50% of AGI * 600 x $25 = $15,000 30% x $25,000 = $7,500

28 Determining the Contributions Deduction For Gifts to PUBLIC Charities Cash? Yes Deductible up to 50% of AGI * No Capital Gain Property? Yes No Both tangible and personal? Is FMV < Adjusted Basis? Yes Deduct FMV up to 50% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Yes Used in exempt function? No Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * Yes Choose One: * Excess amounts may be carried forward for 5 years Copyright © 2000 by M. Ray Gregg. All rights reserved. Yes Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Is FMV < Adjusted Basis? Excess amounts may be Carried forward for 5 years

29 29 Choose one: Deduct Basis to 30% of AGI * to 50% of AGI * Deduct FMV 600 x $10 = $6,000 50% x $25,000 = $12,500

30 x $10 = $6,000 to 50% of AGI * Choose one: Deduct Basis to 30% of AGI * Deduct FMV 30% x $25,000 = $7,500

31 31 Contributions Problem

32 Determining the Contributions Deduction For Gifts to PUBLIC Charities Cash? Yes Deductible up to 50% of AGI * No Capital Gain Property? Yes No Both tangible and personal? Is FMV < Adjusted Basis? Yes Deduct FMV up to 50% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Yes Used in exempt function? No Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * Yes Choose One: * Excess amounts may be carried forward for 5 years Copyright © 2000 by M. Ray Gregg. All rights reserved. Yes Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Is FMV < Adjusted Basis? Both tangible and personal? No

33 33 Choose one: Deduct Basis to 30% of AGI * to 50% of AGI * Deduct FMV Problem

34 34 Choose one: Deduct Basis to 30% of AGI * to 50% of AGI * Deduct FMV $50,000 30% x $100,000 = $30,000 Problem

35 35 Choose one: Deduct Basis to 30% of AGI * to 50% of AGI * Deduct FMV $40,000 50% x $100,000 = $50,000 Problem

36 36 Contributions Problem Problem

37 Determining the Contributions Deduction For Gifts to PUBLIC Charities Cash? Yes Deductible up to 50% of AGI * No Capital Gain Property? Yes No Both tangible and personal? Is FMV < Adjusted Basis? Yes Deduct FMV up to 50% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Yes Used in exempt function? No Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * Yes Choose One: * Excess amounts may be carried forward for 5 years Copyright © 2000 by M. Ray Gregg. All rights reserved. Yes Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Is FMV < Adjusted Basis? Both tangible and personal?

38 38 Problem a.$40,000 FMV30% limit

39 Determining the Contributions Deduction For Gifts to PUBLIC Charities Cash? Yes Deductible up to 50% of AGI * No Capital Gain Property? Yes No Both tangible and personal? Is FMV < Adjusted Basis? Yes Deduct FMV up to 50% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Yes Used in exempt function? No Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * Yes Choose One: * Excess amounts may be carried forward for 5 years Copyright © 2000 by M. Ray Gregg. All rights reserved. Yes Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Is FMV < Adjusted Basis?

40 40 Problem a.$40,000 FMV30% limit b.$10,000 basis50% limit

41 Determining the Contributions Deduction For Gifts to PUBLIC Charities Cash? Yes Deductible up to 50% of AGI * No Capital Gain Property? Yes No Both tangible and personal? Is FMV < Adjusted Basis? Yes Deduct FMV up to 50% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Yes Used in exempt function? No Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * Yes Choose One: * Excess amounts may be carried forward for 5 years Copyright © 2000 by M. Ray Gregg. All rights reserved. Yes Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Is FMV < Adjusted Basis?

42 42 Problem a.$40,000 FMV30% limit b.$10,000 basis50% limit c.$100,000 FMV30% limit

43 Determining the Contributions Deduction For Gifts to PUBLIC Charities Cash? Yes Deductible up to 50% of AGI * No Capital Gain Property? Yes No Both tangible and personal? Is FMV < Adjusted Basis? Yes Deduct FMV up to 50% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Yes Used in exempt function? No Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * Yes Choose One: * Excess amounts may be carried forward for 5 years Copyright © 2000 by M. Ray Gregg. All rights reserved. Yes Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Is FMV < Adjusted Basis?

44 44 Problem a.$40,000 FMV30% limit b.$10,000 basis50% limit c.$100,000 FMV30% limit d.$50,000 basis50% limit

45 Determining the Contributions Deduction For Gifts to PUBLIC Charities Cash? Yes Deductible up to 50% of AGI * No Capital Gain Property? Yes No Both tangible and personal? Is FMV < Adjusted Basis? Yes Deduct FMV up to 50% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Yes Used in exempt function? No Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * Yes Choose One: * Excess amounts may be carried forward for 5 years Copyright © 2000 by M. Ray Gregg. All rights reserved. Yes Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Is FMV < Adjusted Basis?

46 46 Problem a.$40,000 FMV30% limit b.$10,000 basis50% limit c.$100,000 FMV30% limit d.$50,000 basis50% limit e.$500 basis50% limit

47 47 Contributions Problem 7 – 56 Problem 7 – 54 Problem 7 – 61

48 48 Problem If sold then cash donated

49 49 Problem If sold then cash donated

50 50 Problem If sold then cash donated

51 51 Problem If sold then cash donated

52 52 Problem If sold then cash donated

53 53 Problem If sold then cash donated

54 54 Problem If sold then cash donated

55 55 Problem If sold then cash donated

56 56 Problem If stock donated

57 Determining the Contributions Deduction For Gifts to PUBLIC Charities Cash? Yes Deductible up to 50% of AGI * No Capital Gain Property? Yes No Both tangible and personal? Is FMV < Adjusted Basis? Yes Deduct FMV up to 50% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Yes Used in exempt function? No Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * Yes Choose One: * Excess amounts may be carried forward for 5 years Copyright © 2000 by M. Ray Gregg. All rights reserved. Yes Deduct FMV up to 30% of AGI * Deduct Adjusted Basis up to 50% of AGI * No Is FMV < Adjusted Basis?

58 58 Choose one: Deduct Basis to 30% of AGI * to 50% of AGI * Deduct FMV $30,000 Problem If stock donated

59 59 Problem If stock donated

60 60 Problem If stock donated

61 61 Problem If stock donated

62 62 Problem If sold then cash donated: If stock donated:

63

64

65

66

67

68

69 69 Itemized Deductions Medical Taxes Interest Charitable Contributions Casualty Losses Other

70 70


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