Scenario:
Jonathan contributes a painting to an art museum in November of this year. He has owned the painting for 12 years and it is worth $130,000 at the time of the donation. Jonathan’s adjusted basis for the painting is $90,000, and his AGI for the year is $250,000. Jonathan asked you whether he should make the reduced deduction election for this contribution.
Review the attached document and address the following questions. Cite only from attached resources. (combined answers should total 400 word minimum)
Please review the 30% limitation and how the reduced election would apply.
Please see footnote 51 and the election to increase the limitation from 30% to 50%.
2. What is the tax planning decision that Jonathan needs to make taking into account the five year carryover rule?
3. What factors would you consider in deciding whether to elect the reduced deduction election?
4. What are the tax consequences if Jonathan wanted to make a cash contribution instead of a property contribution?
5. What would be the charitable deduction if the property was not put to related use?
