Joseph Thompson is president and sole shareholder of Jay Corporation. In December 2016, Joe asks your advice
Question:
Joseph Thompson is president and sole shareholder of Jay Corporation. In December 2016, 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 2016:
____________________________________________________________________ Fair Market Value
(1) Cash donation ...................................................................................... $200,000
(2) Unimproved land held for six years ($110,000 basis) ...................... 200,000
(3) Maize Corporation stock held for eight months ($140,000 basis) .. 200,000
(4) Brown Corporation stock held for nine years ($360,000 basis) .... 200,000
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.
Step by Step Answer:
South Western Federal Taxation 2017 Comprehensive
ISBN: 9781305874169
40th Edition
Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young