Blue Corporation donates the following property to Johnson Elementary School:
%u2022 XYZ Corporation stock purchased two years ago for $25,000. The stock has a
$19,000 FMV on the contribution date.
%u2022 Computer equipment built one year ago at a cost of $16,000. The equipment has a
$50,000 FMV on the contribution date. Blue is not in the business of manufacturing
computer equipment.
%u2022 PQR Corporation stock purchased six months ago for $12,000. The stock has an
$18,000 FMV on the contribution date.
The school will sell the stock and use the proceeds to renovate a classroom to be used as
a computer laboratory. Blue%u2019s taxable income before any charitable contribution deduction,
dividends-received deduction, or NOL or capital loss carryback is $400,000.
a. What is Blue%u2019s charitable contributions deduction for the current year?
b. What is Blue%u2019s charitable contribution carryback or carryover (if any)? In what years
can it be used?
c. What would have been a better tax plan concerning the XYZ stock donation?