Problem 17-39 (LO. 1, 7)

In 2020, Gray Corporation, a calendar year C corporation, has a $75,000 charitable contribution carryover from a gift made in 2015. Gray is contemplating a gift of land to a qualified charity in either 2020 or 2021. Gray purchased the land as an investment five years ago for $100,000 (current fair market value is $250,000). Before considering any charitable deduction, Gray projects taxable income of $1,000,000 for 2020 and $1,200,000 for 2021.

Should Gray make the gift of the land to charity in 2020 or in 2021?

If an amount is zero, enter "0".

a. If Gray makes the gift of the land to charity in 2020: The amount of the deduction would be $fill in the blank 1 and the corporation is able to use $fill in the blank 2 of the $75,000 carryover. Therefore, Gray has a $fill in the blank 3 carryover to 2021, of which $fill in the blank 4 would be used in 2021, leaving $fill in the blank 5 to be carried over to 2022.

b. If Gray waits and makes the gift of the land to charity in 2021: The corporation would have $fill in the blank 6 carryover from 2015 and $fill in the blank 7 carryover from 2020. In 2021, the amount of the deduction would be $fill in the blank 8 and the excess of $fill in the blank 9 would carryover to 2022.

c. Therefore, Gray should make the gift of the land to charity in 2021 .