Choice "B" is correct. The charitable contribution deduction for
contributions of property is normally the lesser of the property's basis
or the fair market value of the property, on the date of the donation,
or the lesser of $14,000 or $25,000 in this question. However,
contributions of appreciated property, as in this question, are deducted
at fair market value, provided the taxpayer held the property for over
one year. That deduction might be limited to 50% of AGI ($45,000) or 30%
of AGI for long-term appreciated property ($27,000), but the $25,000 is
the maximum deduction in this case. The "lesser of" rule really applies
to depreciated property and keeps a taxpayer from taking a fair market
value deduction for such property.
Choice "c" is incorrect. The
$14,000 is the original cost of the asset. The maximum deduction for
appreciated property is the fair market value of the property, not the
original cost.
Choice "a" is incorrect. The $11,000 is the
difference between the $25,000 fair market value of the land and the
$14,000 original cost. It is thus the appreciation of the land before
the date of donation. The appreciation of appreciated property is not
the amount of the charitable contribution deduction.
Choice "d" is
incorrect. Taylor has income in Year 13 of $90,000; therefore, at least
a portion of a deduction for the land can be deducted, even if the fair
market value of the land exceeded the defined limits for the year.
|
