ExpertMedium1 markMultiple Choice
CPA · Question 53 · Area III: Entity Tax Planning
A C Corporation makes a charitable contribution of $20,000. Its taxable income before the contribution, dividends received deduction (DRD), and NOL carryback is $100,000. What is the deductible amount in the current year?
A C Corporation makes a charitable contribution of $20,000. Its taxable income before the contribution, dividends received deduction (DRD), and NOL carryback is $100,000. What is the deductible amount in the current year?
Answer options:
A.
$20,000
B.
$10,000
C.
$25,000
D.
$5,000
How to approach this question
C Corp Charity Limit: 10% of Taxable Income (before Charity, DRD, Capital Loss Carryback). <br/>$100k * 10% = $10k.
Full Answer
B.$10,000✓ Correct
$10,000
IRC §170(b)(2). The deduction for charitable contributions by a corporation is limited to 10% of taxable income computed without regard to the contribution, DRD, and loss carrybacks.
Common mistakes
Using the individual 50%/60% limits.
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