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Contribution of the stock will result in a less desirable outcome from a tax perspective.However, you will benefit in two ways if you sell the stock and give the $200,000 inproceeds to the University. Donation of the proceeds will result in a $200,000 charitablecontribution deduction. In addition, sale of the land will result in a $160,000 long-termcapital loss. If Jay Corporation had capital gains of at least $160,000 and paid corporateincome tax in the past three years, the entire loss can be carried back and Jay will receivetax refunds for the carryback years. If Jay Corporation had no capital gains in thecarryback years, the capital loss can be carried forward and offset against capital gains ofthe corporation for up to five years.Jay Corporation should make the donation in time for the ownership to change handsbefore the end of the year. Therefore, I recommend that you notify your brokerimmediately so there will be no problem in completing the donation on a timely basis.I will be pleased to discuss my recommendation in further detail if you wish. Please callme if you have questions. Thank you for consulting my firm on this matter. We lookforward to serving you in the future.Sincerely,Richard Stinson, CPANote to instructor: The land and stock are “unrelated use property” but they are not “tangible personal property.”pp. 2-12, 2-14, and 2-1550.Gray Corporation should defer the gift of the land until 2014. This would allow Gray tofully deduct in 2013 the carryover contribution amount of $75,000. If, instead, Graygifted the land in 2013, the corporation would lose any otherwise allowable deduction asto the $75,000 carryover amount. This occurs because current year gifts are appliedagainst the taxable income limitation before application of any carryover amounts. Thus,the taxable income limitation for 2013 would be completely exhausted by the gift of landin 2013. Since 2013 represents the fifth and last year of the carryover period, a gift of theland in 2013 precludes any deduction for the $75,000. A gift of appreciated land held formore than one year as an investment results in a charitable deduction equal to the land’sfair market value (subject to the taxable income limitation). Assuming a gift of the land in 20142013 taxable income limitation: 10% × $1 million = $100,000.2013 charitable contribution deduction: $75,000 (carryover from 2008 gift).2014 taxable income limitation: 10% × 1.2 million = $120,000.2014 charitable contribution deduction: $120,000 (gift of land; excess contribution of $130,000 is carried forward for up to 5 years).Assuming a gift of the land in 20132013 taxable income limitation: 10% × $1 million = $100,000.2013 charitable contribution deduction: $100,000 (gift of land; excess contribution of $150,000 is carried forward for up to 5 years). Carryover from 2008 gift ($75,000) disappears, as 2013 is the last year of the carryover period.2014 taxable income limitation: 10% × 1.2 million = $120,000.2014 charitable contribution deduction: $120,000 (carryover from 2013 gift; remaining $30,000 of carryover from 2013 gift carries over to 2015).pp. 2-14, 2-15, 2-39, and 2-40
51. Hoffman, Raabe, Smith, and Maloney, CPAs5191 Natorp BoulevardMason, OH 45040December 17, 2013Mr. Dan Simms, PresidentSimms Corporation1121 Madison StreetSeattle, WA 98121Dear Mr. Simms: