[FindaJob]

Hi … I was googling the issue … and some1 already had this question, I had the same thought process so, I’m just gonna copy what he asked:

Becker R2, class questions #9,CPA-01926

Taylor, an unmarried taxpayer, had $90,000 in adjusted gross income for 20×4. During 20×4, Taylor donated land to a church and made no other contributions. Taylor purchased the land in 1994 as an investment for $14,000. The land’s fair market value was $25,000 on the day of the donation. What is the maximum amount of charitable contribution that Taylor may deduct as an itmized deduction for the land donation in 20×4?

a.25,000

b.14,000

c.11,000

d.0

Ans:a.

What confuses me is on R2, pg.24. In the paragraph of 5-b-(1): A gift must be in the form of cash or (FMV) property. The deduction for contributed property is usually measured by the lesser of the property’s basis or its fair value market at the time the contribution is made.

According to above, the basis for the land donated by Taylor is 14,000, which is lesser than the FMV 25,000 at the time of donation. The deduction should be measured at the lesser of basis, not the FMV. However, the answer is a, FMV $25,000. Do I misunderstand anything on this?

Thanks for any help!

two to go !

[2/15 n/30]

Your right, but read a little further on page R2-25….

c) Appreciated Property

1) Deduct at fair value

Appreciated property (property having a value greater than its basis) is deductable at its fair market value if it was held of over one year.

Bec: 8/31/12
Aud: 8/1/12
Reg: 76
Far: 73

[FindaJob]

Dude ! Thanks ! I really appreciate that ! I might have read it 3 times but its that time of the day when you read with no focus ! Thanks a lot ! 🙂 Good luck on Audit 🙂 >

two to go !

[2/15 n/30]

No problem. Good luck on REG!

Bec: 8/31/12
Aud: 8/1/12
Reg: 76
Far: 73

[Author]

Replies