D is corrent. The requirement is to determine the maximum amount of charitable contribution allowable as an itemized deduction. The amount of contribution for appreciated property is generally the property’s FMV if the property would result in a long-term capital gain if sold. If not, the amount of contribution for appreciated property is generally limited to the property’s basis. Here, the stock worth $5,000 was purchased for $2,000 just 10 months earlier. Since its holding period does not exceed 12 months, a sale of the stock would result in a short-term capital gain, and the amount of allowable charitable contribution deduction is limited to the stock’s basis of $2,000. Additionally, to be deductible, a contribution must be made to a qualifying organization. As a result, the $1,500 cash given to a needy family is not deductible.
A is incorrect. The donation must be made to a qualified organization to be deductible.
B is incorrect. The stock is not capital gain property because it was not held for more than 12 months.
C is incorrect. The donation to a needy family is not deductible.
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