What would be the 2009 charitable deduction under current IRS rules
for the following scenario?
Home Inherited on 6/1/2009 and donated to a 50% limited organization
on 6/30/2008= $50000
FMV of home on date of death of decedent
Additional cash contributions to a local church= $5000
Total donations of: $55,000.
2009 Deduction: $20,000.
Carryforward to 2010: $35,000.
Carryforward last year: 2014.
Form 8283 and an appraisal are required, in addition to the usual letters
confirming the contributions by the recipient charities.
On Oct 30, 9:31 am, "D. Stussy"
Could the donor/taxpayer choose to deduct the FMV of the real estate
instead of it tax basis and thereby get a 30%-limited deduction which
*might* - I say *might* - last longer and thereby end up in a higher
tax bracket? No guarantees, but *could* this work out to the
A house is capital gain property, right? So the 30% rule would apply
for the house (max $12,000), and the 50% rule for the cash (max
$20,000), with a combined max of $20,000. In this case the deduction
would be $17,000 ($12,000 plus $5,000).
However publication 526 says "However, the special 30% limit does not
apply when you choose to reduce the fair market value of the property
by the amount that would have been long-term capital gain if you had
sold the property. Instead, only the 50% limit applies." That seems
to mean that if you deduct the cost basis you get to use the more
generous 50% rule. The value of the home is probably similar to what
it was on 6/1/2009, maybe even less, so we could make the election.
Is this why you said the limit is $20,000.
Do we have "Temporary Suspension of 50% Limit for Midwestern Disaster
Area Contributions" in 2009? If so, then the $5,000 may be subject to
the 100% limit, provided that it is used for relief efforts.
It might be a good idea to convert IRA to Roth. Doing this will
increase your AGI, but the itemized deduction would wipe out half of
That question makes no sense. As the donor inherited the property 29 days
before donating it, his tax basis is equal to FMV. Therefore, what's the
point of stretching it out NOW and losing $8,000 of the current year
deduction? If it turns out that later years are in a higher tax bracket,
he can go back and amend this later.
What you're saying makes legal sense, but not necessarily practical
Technically someone inherits property on the day the donor dies. But
it may be months or even years before he receives paper title to the
property and has the ability to donate it. The property value can
easily change over that time.