- What is the taxpayer's charitable contribution deduction for 2025?
Answer: $60,000, with a $10,000 carryover that may be used over the next five years.
IRC § 170(b)(1)(C) limits the deduction for contributions of long-term capital gain property to public charities to 30% of the taxpayer's contribution base, and such contributions are valued at fair market value, not adjusted basis. Thirty percent of $200,000 is $60,000, so the current-year deduction is $60,000, and the remaining $10,000 carries over to each of the five succeeding taxable years, subject to the same 30% limit. Choice B is correct. Choice A deducts the full fair market value and in effect applies the 60% cash-contribution limit to a gift of property; the 30% capital-gain-property limit governs. Choice C reduces the stock to its adjusted basis; that basis limitation applies to ordinary income property under IRC § 170(e)(1)(A), not to long-term capital gain property. Choice D states the correct current-year amount but allows the carryover for ten years; the carryover period is five years.
- Which of the following is correct regarding the deductibility of the $600 contribution?
Answer: The contribution is not deductible because the acknowledgment was not received by the date the return was filed.
IRC § 170(f)(8) requires a taxpayer to obtain a written acknowledgment from the donee for any contribution of $250 or more by the earlier of the date the return for the contribution year is filed or the due date of that return, including extensions. The taxpayer filed on February 10, 2026, and did not obtain the acknowledgment until March 5, 2026, so the acknowledgment is not contemporaneous and the $600 contribution is not deductible. Choice A is correct. Choice B assumes an amended return can cure the defect, but the acknowledgment must be obtained before the original return is filed, and a later amendment does not make it contemporaneous. Choice C applies only the due-date prong of the test and ignores that the return was filed before the acknowledgment was received. Choice D treats the canceled check as sufficient, but for contributions of $250 or more, a bank record does not substitute for the donee's written acknowledgment.
- Which of the following is correct regarding the substantiation of a cash charitable contribution of $250 or more made in 2025?
Answer: The donor must obtain the charity's written acknowledgment by the earlier of the date the donor files the return for the year of the contribution or the due date of the return, including extensions, and the acknowledgment must state whether the charity provided any goods or services in return.
IRC §170(f)(8); Treas. Reg. §1.170A-13(f). A cash contribution of $250 or more is not deductible unless the donor obtains a contemporaneous written acknowledgment from the donee organization. The acknowledgment is contemporaneous if obtained on or before the earlier of the date the return is filed or the due date of the return, including extensions, and it must state the amount of cash, whether the charity provided any goods or services in return, and a description and good-faith estimate of the value of any goods or services. Choice B states both the timing and the content requirements. Choice A misstates the threshold: the $250 requirement applies to each separate contribution, not to the aggregate of separate gifts to one charity during the year. Choice C misstates the substantiation rule: a bank record or canceled check is sufficient only for a contribution of less than $250. Choice D adds requirements the statute does not impose; the acknowledgment need not be on letterhead, need not state the charity's EIN, and is not attached to the return.
- Which of the following is correct regarding the client's charitable contribution deduction for the car?
Answer: The deduction is limited to $2,900, and the taxpayer must attach the charity's Form 1098-C to the return.
IRC § 170(f)(12) limits a deduction for a donated vehicle with a claimed value over $500 to the gross proceeds of the donee's sale of the vehicle when the donee does not make a significant intervening use of the vehicle or materially improve it. The charity sold the car at auction two weeks after receipt with no intervening use or improvement, so the deduction is limited to the $2,900 gross proceeds. The charity must provide Form 1098-C, and the taxpayer must attach it to her return. Choice D is correct. Choice A treats the acknowledgment and the pricing guide as establishing a $4,500 fair market value, but IRC § 170(f)(12) substitutes the gross sale proceeds for fair market value in these circumstances. Choice B reaches the correct amount but states that no separate form is required; Form 1098-C must be attached, and the $5,000 threshold relates to qualified appraisals under IRC § 170(f)(11), not to the vehicle-contribution rules. Choice C would allow fair market value if a qualified appraisal and Form 8283 support it; the gross-proceeds limitation applies regardless of appraisal, and Form 1098-C is the operative document for a donated vehicle.
- What amount may the taxpayer deduct as a charitable contribution for the sculpture?
Answer: $8,000, because the charity's immediate auction of the sculpture is an unrelated use, and the deduction is limited to the adjusted basis.
IRC § 170(e)(1)(B)(i) reduces the deduction for a contribution of tangible personal property to the donor's adjusted basis when the donee's use of the property is unrelated to its exempt purpose. The charity's established practice of auctioning donated artwork, and its sale of the sculpture one month after receipt, establish an unrelated use, so the sculpture is deductible at its $8,000 adjusted basis rather than its $20,000 fair market value. Choice C is correct. Choice A states the general rule that a donee's later sale does not affect the donor's deduction, but that rule does not apply to tangible personal property put to an unrelated use. Choice B applies the 30% capital-gain-property limit to the full fair market value without first reducing the contribution to basis; once the deduction is limited to basis, the ordinary 50% charitable limit, not the 30% capital-gain limit, applies. Choice D treats the charity's written acknowledgment as fixing the deductible value, but an acknowledgment is a substantiation document and does not override the IRC § 170(e)(1)(B)(i) basis limitation.
- What is the maximum charitable contribution deduction she may claim for 2025, and how is any excess treated?
Answer: She may deduct $60,000 for 2025, and the remaining $10,000 may be carried over and deducted in any of the next five years to the extent the 60% limit is not fully used in that carryover year.
IRC §§ 170(b)(1)(G) and 170(d)(1). For 2025, an individual's cash contributions to a public charity are deductible up to 60% of adjusted gross income. Here 60% of the taxpayer's $100,000 AGI is $60,000, so $60,000 of the $70,000 gift is deductible in 2025; the remaining $10,000 carries over to each of the five succeeding tax years and retains its character as a cash contribution subject to the 60% limit in the year it is used. Choice C states that rule. Choice A misstates the treatment of the excess: contributions to a 50%-limit organization in excess of the annual limit are carried over, not forfeited. Choice B misstates the limits: cash contributions to public charities are subject to the 60% limit, and contributions of capital gain property are generally subject to the 30% limit. Choice D applies a 50% limit; for 2025 the applicable limit is 60%, so the current-year deduction is $60,000 and the carryover is $10,000, not $20,000.
- Which of the following is correct regarding the substantiation and deduction of noncash charitable contributions for 2025?
Answer: If a taxpayer's total claimed deduction for all noncash contributions during the year exceeds $500, the taxpayer must file Form 8283 with the return for the year of the contributions.
IRC §170(f)(11); IRC §170(f)(16); Treas. Reg. §§ 1.170A-16 and 1.170A-17 (for contributions after July 30, 2018); Form 8283 instructions. A taxpayer whose total claimed deduction for noncash charitable contributions is more than $500 must report the gifts on Form 8283 and attach it to the return for the year of the contribution. Under the general substantiation rules, a qualified appraisal is required—subject to statutory exceptions such as publicly traded securities—when the claimed value of donated property exceeds $5,000; for gifts between $5,000 and $500,000, the taxpayer keeps the qualified appraisal in records and attaches the Form 8283 appraisal summary, not the appraisal itself. Generally, the qualified appraisal itself must be attached only when the claimed value exceeds $500,000 (or for art with a claimed deduction of $20,000 or more, and for a single item of clothing or household item over $500 that is not in good used condition). Choice D states the Form 8283 threshold. Choice A misstates the appraisal requirement: publicly traded securities are excepted from the qualified appraisal requirement. Choice B misstates the attachment rule: to the extent an appraisal is required, it is generally retained, not attached, for gifts between $5,000 and $500,000. Choice C misstates the statutory exception to the good-condition rule: a single item of clothing or household item for which a deduction of more than $500 is claimed may be deducted even if it is not in good used condition when a qualified appraisal is obtained and included with the return.
- Which of the following is correct regarding the charitable contribution deduction for a motor vehicle donated to a charity in 2025?
Answer: If the charity sells the vehicle without any significant intervening use or material improvement and the claimed value exceeds $500, the deduction is limited to the gross proceeds from the sale, and the donor must obtain and attach Form 1098-C to the return.
IRC §170(f)(12); Treas. Reg. §1.170A-16. For a donated vehicle with a claimed value over $500, the deduction is limited to the gross proceeds the charity receives on a sale unless the charity makes a significant intervening use or a material improvement of the vehicle before the sale, and the donor must substantiate the contribution with Form 1098-C, attached to the return. Choice D states that rule. Choice A misstates the rule: when the charity sells without a significant intervening use or material improvement, the deduction is the gross proceeds, not fair market value, regardless of whether the sale is at arm's length. Choice B misstates the substantiation rule: a $400 contribution is $250 or more, so the general contemporaneous written acknowledgment requirement of IRC §170(f)(8) still applies. Choice C misstates the significant-use exception: if the charity significantly uses the vehicle, the donor may deduct its fair market value, not the proceeds of the charity's later sale.
- What amount may the taxpayer deduct as a casualty loss for 2025?
Answer: $3,900
IRC § 165(h)(1) and (2) allow a personal casualty loss only to the extent each event's loss exceeds $100 and the aggregate loss exceeds 10% of adjusted gross income, and IRC § 165(h)(5) limits personal casualty and theft losses for 2025 to losses arising from federally declared disasters. The hurricane loss is $12,000: the lesser of the $40,000 decline in fair market value or the $260,000 adjusted basis, reduced by the $28,000 insurance payment. The jewelry theft is a personal theft loss that did not arise from a federally declared disaster, so it is not deductible. The deductible loss is $12,000, reduced by $100 and by $8,000 (10% of $80,000 AGI), leaving $3,900. Choice A is correct. Choice B includes the $5,000 jewelry loss and applies only one $100 floor. Choice C omits the 10%-of-AGI floor. Choice D includes the jewelry loss and applies a separate $100 floor to each event, but the theft loss is not deductible at all.
- Which of the following is correct regarding the deductibility of the two losses for 2025?
Answer: The business building loss is deductible, but the personal residence loss is not, because the federally declared disaster requirement applies only to losses of personal-use property.
IRC § 165(h)(5) disallows a personal casualty loss for 2025 unless the loss resulted from a federally declared disaster; a personal casualty loss is a loss of property not connected with a trade or business or a transaction entered into for profit. The ice storm was not a federally declared disaster, so the loss to the personal residence is not deductible. The building used in the taxpayer's sole proprietorship is business property, so its loss is a business casualty loss deductible under IRC § 165(c)(1) without regard to the disaster requirement, the $100-per-event floor, or the 10%-of-AGI floor; it is deducted in computing business income and is not an itemized deduction. Choice B is correct. Choice A would subject both losses to the personal casualty floors and treat the business loss as an itemized deduction. Choice C would allow the residence loss, which fails the disaster requirement, and would apply the 10% floor to the business loss, which is not a personal casualty loss. Choice D overstates the disaster requirement by extending it to business property.
- What amount may the taxpayer deduct as a charitable contribution for her volunteer expenses?
Answer: $280, including 500 miles at the charitable rate, $60 of parking and tolls, and $150 of unreimbursed supplies.
IRC § 170(i) sets the charitable contribution standard mileage rate at 14 cents per mile, and Treas. Reg. § 1.170A-1(g) treats unreimbursed out-of-pocket expenses incurred in performing services for a charity as a charitable contribution. The deduction is 500 miles at 14 cents per mile ($70), plus $60 of parking and tolls, plus $150 of unreimbursed supplies ($200 minus the $50 reimbursement), for a total of $280. The charity's written acknowledgment satisfies the substantiation requirement for the $280 of unreimbursed expenses, and the value of the taxpayer's services is not deductible. Choice B is correct. Choice A uses the 70-cents-per-mile business standard mileage rate, which does not apply to charitable services. Choice C adds $600 for 40 hours of service; the value of services is never deductible as a charitable contribution. Choice D fails to reduce the supplies by the $50 reimbursement, since only unreimbursed out-of-pocket expenses are deductible.
- What amount may she deduct as a charitable contribution on her 2025 Schedule A?
Answer: $6,476
Under IRC §170(a), deductible charitable contributions are transfers to qualified organizations, reduced by any benefit received; therefore, Choice B is correct. A contribution of long-term capital gain property (the publicly traded stock) to a public charity is measured by FMV, not basis. Under IRC §170(i) and Treas. Reg. §1.170A-1(g), unreimbursed volunteer driving for charity is deductible at 14 cents per mile, and parking and tolls are deductible. The deduction is $2,500 (church cash) + $200 (shelter cash) + $600 (furniture) + $3,000 (stock FMV) + $21 (150 miles × $0.14) + $15 (parking/tolls) + $140 ($200 dinner ticket − $60 meal FMV) = $6,476. The $500 online fundraiser transfer is to individuals rather than a qualified organization, and the $250 campaign gift is a political contribution. All AGI contribution limits are satisfied. Choice A ($5,476) uses the stock's $2,000 basis instead of its $3,000 FMV. Choice C ($6,726) adds the $250 political contribution. Choice D ($6,976) adds the $500 online fundraiser transfer.
- What total amount may the taxpayer deduct on Schedule A for 2025 with respect to the charitable contributions and casualty loss described above?
Answer: $78,600
Choice A is correct. Governing authorities: IRC §§ 170(b)(1), 170(f)(12), 170(f)(16), and 165(h); Form 4684 instructions.
Computation:
• Church cash, $25,000: allowed in full. It is within the 60%-of-AGI limit (60% × $150,000 = $90,000) and is supported by a contemporaneous written acknowledgment.
• Stock, $45,000: capital gain property given to a public charity is deductible at fair market value, but gifts of capital gain property are capped at 30% of AGI (30% × $150,000 = $45,000). The $5,000 excess carries over; it is not deductible in 2025.
• Auto, $2,800: when a charity sells a donated vehicle without a significant intervening use and furnishes Form 1098-C, the deduction is limited to the gross sale proceeds of $2,800, not the $6,000 fair market value.
• Clothing, $900: clothing in good used condition is deductible at its thrift-store value.
• Refrigerator, $0: no deduction is allowed for clothing or household items not in good used condition, and the $400 value is below the $500 threshold for the qualified-appraisal exception.
• Casualty, $4,900: for personal-use property, the loss is the lesser of the decline in FMV ($24,000) or adjusted basis ($21,000), reduced by insurance: $21,000 − $1,000 = $20,000. Then apply the $100-per-event floor and the 10%-of-AGI floor (10% × $150,000 = $15,000): $20,000 − $100 − $15,000 = $4,900. The loss is deductible only because it resulted from a federally declared disaster.
Total: $25,000 + $45,000 + $2,800 + $900 + $4,900 = $78,600.
Choice B ($81,600) starts the casualty computation with the full $24,000 pre-disaster FMV instead of the lesser of the decline in FMV and adjusted basis ($21,000), adding $3,000. Choice C ($83,600) deducts the stock at its entire $50,000 fair market value, omitting the 30%-of-AGI cap on capital gain property. Choice D ($93,600) applies the $100 floor to the casualty loss but omits the 10%-of-AGI floor, deducting $19,900 instead of $4,900.
- What amount is her casualty loss on Form 4684 before applying the $100-per-casualty floor and the 10%-of-AGI limitation?
Answer: $15,000
Choice A is correct. Under IRC §165(a) and the Form 4684 instructions, a personal casualty loss is the lesser of the decrease in FMV or the adjusted basis, reduced by insurance or other reimbursement. The decrease in FMV is $260,000 − $150,000 = $110,000, which is less than the $200,000 adjusted basis, so the loss before reimbursement is $110,000. Subtracting the $95,000 insurance payment gives $15,000. Because the damage is from a federally declared disaster, the loss is eligible for the personal casualty deduction; the $100 and 10%-of-AGI reductions are applied after this Form 4684 amount. Temporary repair costs are not added to the loss when the decrease in FMV is already established. Choice B ($17,000) adds the $2,000 temporary repairs. Choice C ($105,000) subtracts the insurance from basis and ignores the smaller FMV decline. Choice D ($110,000) omits the insurance reimbursement.
