1. Alma Geste has a painting that she purchased for $50,000 five years ago and which now has a fair market value of $100,000. She donates the painting to the Metropolitan Museum. Her current year adjusted gross income is $110,000.

Alma should take a charitable contribution deduction at the original cost basis of $50,000 so that the full amount is deductible in the current year, if she does not believe the excess charitable contribution taken at fair market value will ever be used because of AGI limitations.

Alma should take the fair market value deduction because it is twice as large as the cost basis deduction even if only $33,000 can be deducted in the current year, despite the fact that her estimated AGI for the next three years is only $50,000.

Alma should take a charitable contribution deduction at the original cost basis of $50,000 so that the full amount is deductible in the current year, because her estimated AGI for the next tax year is $200,000.

Alma's deduction is limited to the adjusted cost basis of the property because she donated tangible personal property which is being put to a use unrelated to the Museum's tax-exempt purpose.

2. Naomi Grace owns a beach house on Cape Cod. She and her family use the home during the summer for one month (28 days). The rest of the summer and into the fall it is rented out for a total of 90 days. Naomi's Cape Cod property is:

rented a de minimis amount of time and therefore she includes no income or deductions from the rental in her taxable income calculation.

used personally for an insignificant amount of time, therefore all her rental income and expenses (allocated between business and personal use) must be reported on Schedule E.

used personally for a significant amount of time and therefore her rental property is a vacation rental home, and her rental expenses are deductible only to the extent of rental income.

None of the above.