[ssaetern]

Moe Co. made cash contributions totaling $50,000 during the year. Before calculating its charitable deduction, Moe had taxable income of $350,000 after a $45,000 dividends-received deduction. What amount may Moe take as a charitable contribution deduction?

Can Moe deduct the whole $50K since it’s cash? Thanks.

[Han]

The deduction is limited to 10% of taxable income before dividends-received deduction

Taxable income before DRD = 350,000 + 45,000 = 395,000.
10% of that is 39,500

So only 39,500 of the 50k is deductible, the rest is carried forward.

[Lily]

Yes, he can.

Remember, taxpayers who do not itemize deductions may not deduct charitable contributions.

CASH CONTRIBUTION can deduct up to 60% AGI.
PROPERTY CONTRIBUTION can deduct up to 30% AGI.

CARRY FORWARD THE EXCESS FOR 5 YEARS.

[Han]

Lily wrote:

Yes, he can.

Remember, taxpayers who do not itemize deductions may not deduct charitable contributions.

CASH CONTRIBUTION can deduct up to 60% AGI.
PROPERTY CONTRIBUTION can deduct up to 30% AGI.

CARRY FORWARD THE EXCESS FOR 5 YEARS.

I don't think that is accurate. The question is about corporation because only corporation has dividend-received deduction. Besides. corporations don't have AGI.

The rules you mentioned are for individuals.
Also the “carry forward for 5 years” rule is for corporation only.

[Lily]

Oh yes, I answered for individuals.
Thank you Han.

[Author]

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