Joseph Thompson is president and sole shareholder of Jay Corporation. In December 2012, Joe asks your advice regarding a charitable contribution he plans to have the corporation make to the University of Maine, a qualified public charity.
Joe is considering the following alternatives as charitable contributions in December 2012:
Fair MarketValue
(1) Cash donation
$200,000
(2) Unimproved land held for six years ($310,000 basis)
200,000
(3) Maize Corporation stock held for eight years ($120,000 basis)
(4) Brown Corporation stock held for nine months ($70,000 basis)
Joe has asked you to help him decide which of these potential contributions will be most advantageous tax wise. Jay’s taxable income is $3.5 million before considering the contribution. Rank the four alternatives and write a letter to Joe communicating your advice. The corporation’s address is 1442 Main Street, Freeport, ME 04032.
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