In December each year, Eleanor Young contributes 10% of her gross income to the United Way…

In December each year, Eleanor Young contributes 10% of her
gross income to the United Way (a 50% organization). Eleanor, who
is in the 28% marginal tax bracket, is considering the following
alternatives for satisfying the contribution. Fair Market Value (1)
Cash donation $169,000 (2) Unimproved land held for six years
($25,350 basis) $169,000 (3) Blue Corporation stock held for eight
months ($25,350 basis) $169,000 (4) Gold Corporation stock held for
two years ($202,800 basis) $169,000 Eleanor has asked you to help
her decide which of the potential contributions listed above will
be most advantageous tax-wise. Evaluate the four alternatives and
complete a letter to Eleanor. Determine the amount of the
charitable contribution for each option. Charitable Contribution
Cash donation $ 169,000 Unimproved land held for six years ($25,350
basis) $ 169,000 Blue Corporation stock held for eight months
($25,350 basis) $ 25,350 Gold Corporation stock held for two years
($202,800 basis) $ 169,000 Hoffman, Young, Raabe, Maloney, &
Nellen, CPAs 5191 Natorp Boulevard Mason, OH 45040 December 5, 2017
Ms. Eleanor Young 2622 Bayshore Drive Berkeley, CA 94709 Dear Ms.
Young: I have evaluated the proposed alternatives for your current
year-end contribution to the United Way. I recommend that you sell
the Gold Corporation stock and donate the proceeds to the United
Way. The four alternatives are discussed below. A donation of cash,
the unimproved land, or the Gold stock will result in a $ 169,000
charitable contribution deduction. Donation of the Blue Corporation
stock will result in only a $ 25,350 charitable contribution
deduction. A direct contribution of the Gold Corporation stock will
be a poor decision from a tax perspective in that the decline in
value is not deductible and the amount of the charitable
contribution would be $ 169,000 . If you sell the Gold stock and
give the proceeds to United Way, the donation of the proceeds will
result in a $ 169,000 charitable contribution deduction. In
addition, sale of the stock will result in a $
————–long-term capital loss. If you have capital gains of
$——— or more this year, you can use the entire loss in
computing your current taxable income. If you have no capital gains
this year, you can deduct $ —————-of the capital loss
this year and carry over the remaining $———— loss to future
years. You should make the donation in time for ownership to change
hands before the end of the year. Therefore, I recommend that you
notify your broker immediately so that there will be no problem in
completing the donation on a timely basis. Please let me know if
you have any questions or would like to discuss my recommendation
and the related analysis. Thank you for consulting our firm on this
matter. We look forward to serving you in the future. Sincerely,
Nora Oldham, CPA

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