Tax Law (Questions About Taxes)/Charitable Contributions

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Question
QUESTION: Mr. Stancil
I would like to make a $70K charitable donation to my prep school. I anticipate my AGI for my 2013 tax year to be near $100K, and do not expect it to be substantially different for this year. As I understand it, I am limited in how much I am allowed to claim for charitable contributions to ˝  my AGI for the year, so that would limit me to $50K for tax year 2014. Am I allowed to carry over the remaining $50K to use as a charitable donation for tax year 2015? Also, if so, in the unlikely event that I should pass away next year after making that donation this year, would my estate be able to use the residual $50K charitable donation towards my final tax declaration?
Thanks.
DBRJ

ANSWER: Dave,

Thanks for your question.

Assuming the donation is not a capital asset, what you have stated is correct.  Any unused charitable contribution not used in the current year will carry forward for as long as five years.  Any unused contribution would be applied to your final return under the same rules.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: Mr. Stancil
Thank YOU, for your prompt reply.
Your capital asset comment is prescient, as my intent is, in fact, to use some appreciated stocks that I own, taking advantage of not only avoiding capital gains taxes, but further, enjoying the benefit of a charitable donation deduction. How would that affect your answer?
Thanks.
DBRJ

ANSWER: Significant change.  Your contribution limit would be 30% rather than 50%.  Same carry forward.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: Significant indeed. So, using the numbers I originally gave you, only $30K worth of stock could be claimed as a charitable deduction for the year. Suppose I was able to obtain from another source a matching grant of $30K, this would now mean the school would be receiving a total of $60K. If now, to reach my target of a $70K donation, I were to also contribute $10K cash, could I now include that in my Charitable contribution for the year, or has the stock contribution "poisoned" the limit?
Thanks again.
DBRJ

Answer
No, the 30% is a secondary limit.  You take your allowable 30% contributions and add them to your 50% contributions to get the overall limitation.  With an AGI if 100k, you could deduct the 30K capital asset plus up to 20K in cash or non capital property.

Hope this helps.

John Stancil, CPA  

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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