ExpertEasy1 markMultiple Choice
CPA · Question 57 · Area II: Entity Tax Compliance
A C Corporation has $100,000 of taxable income. It makes a charitable contribution of $20,000. What is the allowable deduction?
A C Corporation has $100,000 of taxable income. It makes a charitable contribution of $20,000. What is the allowable deduction?
Answer options:
A.
$20,000
B.
$10,000
C.
$5,000
D.
$60,000
How to approach this question
Corporate Charitable Limit: 10% of Taxable Income (before charitable, DRD, NOL carryback). $100k * 10% = $10k.
Full Answer
B.$10,000✓ Correct
IRC §170(b)(2). The deduction is limited to 10% of taxable income. $10,000 is allowed; $10,000 is carried forward.
Common mistakes
Using individual limits (50%/60%); deducting full amount.
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