Spencer, who itemizes deductions, had adjusted gross income of $60,000 for the current year. The following additional information is available for the year:
Cash contribution to church
$ 4,000
Purchase of art object at church bazaar
(with a fair market value of $800 on the date of purchase)
1,200
Donation of used clothing to Salvation Army
(fair value evidenced by receipt received)
600
What is the maximum amount Spencer can claim as a deduction for charitable contributions in the current year?
a. $5,000
b. $5,200
c. $5,400
d. $4,400
The answer is a. $5,000. The thing I do not get is the church bazaar, I assumed it was just a store Spencer bought art from. Otherwise the 50%AGI of $60,000 is $30,000 maximum. The cash is under the maximum so you get the whole amount of 4000. so the Donation of clothes which falls under general property it lower of basis or FMV so they only give FMV so its 600. So right here I'm up to $4,600 in deductions. This is where I mess up because its not one of the answers. The problem answer gives that the purchase of art at church bazaar is the excess paid over FMV so 1200-800 = 400. $4,600+400 =$5,000.
Can anyone explain why purchasing from church bazaar would be charitable? How would you know if you were purchasing something from a charity? How would I be able to determine if a given purchase was related to a charitable contribution? “church bazaar” sounds like it could be a store or something. At least if it was capitalized like Church Bazaar I might be able to determine that it was from a real church because it would then be a pronoun.
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