ExpertHard1 markMultiple Choice
CPA · Question 28 · Area 3: Individual Taxation
A taxpayer (AGI 0,000) donated cash of ,000 to a public charity and long-term capital gain stock (FMV ,000, Basis ,000) to a public charity. What is the maximum charitable contribution deduction allowed in the current year?
A taxpayer (AGI 0,000) donated cash of ,000 to a public charity and long-term capital gain stock (FMV ,000, Basis ,000) to a public charity. What is the maximum charitable contribution deduction allowed in the current year?
Answer options:
A.
,000
B.
,000
C.
,000
D.
,000
How to approach this question
Check limits: Cash = 60% AGI. LTCG Property = 30% AGI. Total = Generally 50% AGI (can go to 60% with cash). Here, 30k + 15k = 45k. AGI is 100k. 45k < 50k. All deductible.
Full Answer
B.,000✓ Correct
Cash contributions to public charities are limited to 60% of AGI. LTCG property is limited to 30% of AGI. Here, ,000 cash is within 60% limit. ,000 stock is within 30% limit. Total ,000 is deductible.
Common mistakes
Applying the 30% limit to cash or assuming the 50% overall limit blocks the deduction (it doesn't here).
Practice the full CPA REG Practice Exam
72 questions · hints · full answers · grading
More questions from this exam
Q01Under Circular 230, which of the following scenarios represents a permissible contingent fee arra...HardQ02A CPA is preparing a tax return for a client who wishes to take a position that the CPA believes ...MediumQ03Regarding the retention of client records under Circular 230, which of the following statements i...HardQ04Under the Ultramares rule regarding accountant liability to third parties for negligence, which o...MediumQ05Taxpayer A filed their Year 1 tax return on April 15, Year 2. The return omitted ,000 of gross in...Medium