[Anonymous]

What deductions are allowed when calculating the limit to charitable contribution deduction? Becker does a poor job at explaining this with their visual on R3 pg 24 as it contradicts what they say on R3 pg 16

[jokami]

You take all the deduction allowed except the dividends received reduction and the charitable contributions. These two are treated separately.

B - 62, 70, 72, 79!!!
A - 68, 81
R - 70, 82
F - 84

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[Minimorty]

The maximum deduction for any tax year is 10% of the corporation's taxable income. Taxable income must be specially computed without regard to the following:

(1) the charitable deduction itself.

(2) the dividend received deduction.

(3) any NOL carried back into the year from a future tax year.

(4) any capital loss carried back into the year from a future tax year.

[Anonymous]

I was about to ask the same question – R3-16 in Becker says what @Minimorty said, but R3-24 says to just exclude charitable contributions and the DRD.

I'm assuming it also excludes the net operating loss carryback and the capital loss carryback but that the figure on R3-24 is just a simplified version to help us understand the application.

Can anyone else confirm this? I'm also confused. Thanks!

[Minimorty]

I am right, but you can go directly to the Internal Revenue Code to confirm.

[Mrs 300]

Minimorty is right. If you take a look at the Form 1120 in your REG book (not sure what page – I burned mine) it might be helpful. Think of it this way – your NOL carryforward/carryback is basically the LAST thing that you can use. See how the NOL space stands alone on the 1120 off to the side? You figure out your taxable income is and THEN you use your NOL carryforward and carrybacks. I am 100% sure of this. I am in tax.

REG - 80 (Becker only)
BEC - 76 (Becker only)
AUD - 71, 76 (Becker only)
FAR - 65, 74, 81! (Becker, Wiley Test Bank, Ninja notes & Audio)

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[Anonymous]

So to confirm, we would do:

Charitable contributions = 10% of taxable income prior to charitable contributions, DRD, and any carrybacks.

DRD is removed after charitable contributions (eg. 80% of dividends or 80% of taxable income after charitable contributions, whichever is less is the deduction)

Then you remove last the NOL, capital loss, etc. carrybacks.

Is that right?

[momto5]

It looks to me like that is pretty much what Becker R3-24 says also. Gross Income minus Deductions (except Charity & DRD) = amount Charity Deduction is figured on. Subtract Charity deduction, then figure DRD on that. Lastly the NOL carryback/carryforward is dealt with.

Seems like on R3-16 they are including NOL as one of the deductions and on R3-24 they just put it at the end as last.

FAR - 92 (4/27/12)
AUD - 96 (7/17/12)
BEC - 92 (8/30/12)
REG - 91 (11/12/12)

[Author]

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