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In addition, sale of the stock will result in a $160,000 long-term capital loss. If Jay Corporationhad capital gains of at least $160,000 and paid corporate income tax in the past three years, theentire loss can be carried back and Jay will receive tax refunds for the carryback years. If JayCorporation had no capital gains in the carryback years, the capital loss can be carried forwardand offset against capital gains of the corporation for up to five years.Jay Corporation should make the donation in time for the ownership to change hands before theend of the year. Therefore, I recommend that you notify your broker immediately so there will beno problem in completing the donation on a timely basis.I will be pleased to discuss my recommendation in further detail if you wish. Please call me if youhave questions. Thank you for consulting my firm on this matter. We look forward to serving youin the future.Sincerely,Richard Stinson, CPANote to instructor: The land and stock are “unrelated use property” but they are not “tangible personal property.”50.Gray Corporation should defer the gift of the land until 2015. This would allow Gray to fullydeduct in 2014 the carryover contribution amount of $75,000. If, instead, Gray gifted the land in2014, the corporation would lose any otherwise allowable deduction as to the $75,000 carryoveramount. This occurs because current year gifts are applied against the taxable income limitationbefore application of any carryover amounts. Thus, the taxable income limitation for 2014 wouldbe completely exhausted by the gift of land in 2014. Since 2014 represents the fifth and last yearof the carryover period, a gift of the land in 2014 precludes any deduction for the $75,000. A giftof appreciated land held for more than one year as an investment results in a charitable deductionequal to the land’s fair market value (subject to the taxable income limitation). Assuming a gift of the land in 20152014 taxable income limitation: 10% × $1 million = $100,000.2014 charitable contribution deduction: $75,000 (carryover from 2009 gift).2015 taxable income limitation: 10% × 1.2 million = $120,000.2015 charitable contribution deduction: $120,000 (gift of land; excess contribution of $130,000 iscarried forward for up to 5 years).Assuming a gift of the land in 20142014 taxable income limitation: 10% × $1 million = $100,000.
2014 charitable contribution deduction: $100,000 (gift of land; excess contribution of $150,000 iscarried forward for up to 5 years). Carryover from 2009 gift ($75,000) disappears, as 2014 is the last year of the carryover period.2015 taxable income limitation: 10% × 1.2 million = $120,000.2015 charitable contribution deduction: $120,000 (carryover from 2014 gift; remaining $30,000 of carryover from 2014 gift carries over to 2016).
51. Hoffman, Raabe, Maloney, Young, & Smith, CPAs5191 Natorp BoulevardMason, OH 45040December 17, 2014Mr. Dan Simms, PresidentSimms Corporation1121 Madison StreetSeattle, WA 98121Dear Mr. Simms:On December 12 you asked me to advise you on the timing of a contribution by SimmsCorporation to the University of Washington. My calculations show that the corporation willmaximize its tax savings by making the contribution in 2014.