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Original Fast Forward Academy test bank question:
Jerry's adjusted gross income for the year is $40,000. How much of the following contributions (after limitations, if any) can he deduct on Schedule A?

• $1,000 paid at a charity auction for a week at a fishing resort in Arkansas. The trip is valued at $1,000.
• $500 to the local Chamber of Commerce.
• Land adjacent to his church for use as a parking lot. The fair market value of the land is $35,000. Jerry paid $20,000 for the land. He doesn't elect to reduce the fair market value to qualify for a different AGI limit.

A. $20,000
B. $12,000
C. $10,500
D. $ 8,000

Explanation:
Jerry's AGI is $40,000. The FMV of his gift of capital gain property equals $35,000. If he uses FMV as the value of the gift, his deduction cannot exceed 30% of his AGI, which is $12,000 ($40,000 x 30%). He could elect to value his gift at cost and receive a higher deduction (50% of AGI limit), but he chose not to do that. A special 30% limit applies to gifts of capital gain property to 50% limit organizations. However, the special 30% limit does not apply when using the taxpayer's cost in place of FMV as the amount of the gift. Instead, only the 50% limit applies. In this case, the FMV of Jerry's gift is used, so his deduction is limited to 30% of AGI.

The $1,000 auction prize is not a donation since the value he receives is the same as what he paid. The Chamber of Commerce donation is also not a gift to a charitable organization.

FFA RTRP Book Reference: CH 6 Standard and Itemized Deductions
Subsection: Itemized deductions
Subject: Charitable contributions (e.g., cash, non-cash, 50% vs 30%, documentation required)
Correct Answer: B