For the current year, Sheila Jones had adjusted gross income of $100,000. During the year, she contributed $6,000 to her church and an additional $3,000 to qualified charities. She also contributed religious artwork with a fair market value of $60,000 and a basis of $20,000 to her church. The church intends to display the religious artwork in the church foyer. If Sheila chooses to itemize her deductions, what is the amount of her deductible charitable contribution?
a. 39,000
B. $20,000
C. $39,000
D. $49,000
To calculate the amount of Sheila's deductible charitable contribution, we need to consider the different types of contributions she made.
1. Cash Contributions:
Sheila contributed $6,000 to her church and an additional $3,000 to qualified charities. The total cash contributions are $6,000 + $3,000 = $9,000.
2. Non-Cash Contributions:
Sheila also contributed religious artwork with a fair market value of $60,000 and a basis of $20,000 to her church. The difference between the fair market value and the basis is the amount of the non-cash contribution that can be deducted. In this case, it is $60,000 - $20,000 = $40,000.
3. Total Deductible Charitable Contribution:
To calculate the total deductible charitable contribution, we add the cash contributions and the value of the non-cash contributions:
$9,000 + $40,000 = $49,000.
Therefore, the amount of Sheila's deductible charitable contribution is $49,000.
The correct answer is D. $49,000.
To determine the amount of Sheila's deductible charitable contribution, we need to consider the rules set by the IRS for charitable deductions.
First, let's break down Sheila's contributions:
1. Cash contributions to her church: $6,000
2. Cash contributions to qualified charities: $3,000
3. Non-cash contribution of religious artwork to her church: fair market value of $60,000, with a basis of $20,000
To calculate the deductible charitable contribution, we need to follow a few steps:
Step 1: Add up the cash contributions:
$6,000 + $3,000 = $9,000
Step 2: Determine the deductible amount of the non-cash contribution:
The deductible amount of non-cash contributions is usually limited to the lesser of the fair market value or the basis of the property. In this case, the basis is $20,000, so the deductible amount for the artwork contribution is $20,000.
Step 3: Add up the deductible cash contributions and the deductible non-cash contribution:
$9,000 (cash contributions) + $20,000 (non-cash contribution) = $29,000
Therefore, the amount of Sheila's deductible charitable contribution is $29,000.
Unfortunately, none of the options provided matches the correct answer.