Charitable Contributions And Deductions - Deduction Limitations and Carryover Periods

Deduction Limitations
The amount of a charitable donation is limitless; however, the amount a taxpayer can deduct on their federal income tax return is limited to a 50% (or less) of their AGI (Form 1040, line 38) depending on the type of donation. When you have made contributions subject to different ceilings, they're applied in a specific order and are subject to an overall ceiling of 50% of AGI. The chart below shows the ceiling percentage for specific gifts to certain charities:

Types of Property
Amount of Deduction
Ceiling for Public Charities and Operating Private Foundations
Ceiling for most Non-operating Private Foundations
Cash
Fair Market Value
50%
30%
Ordinary Income Property and ST Capital Gain Property
Lesser of the Adjusted Basis or the Fair Market Value
50%
30%
LT Capital Gain Property-Intangibles
Fair Market Value/Basis Election
30%/50%
20%
LT Capital Gain- Tangible Property (related use)
Fair Market Value/Basis Election
30%/50%
20%
LT Capital Gain- Tangible Property (unrelated use)
Basis
50%
20%
LT Capital Gain- Real Property
Fair Market Value/Basis Election
30%/50%
20%

*The chart above is used from the Dalton Review for the CFP™ Certification Examination: Volume I Outlines and Study Guides, 2002- 2003 Edition

Carryover Periods
Donations that are not deductible in the year of the gift due to exceeding the 50, 30 or 20% of AGI ceilings, may be carried forward into future tax years over the next five years. The ceiling percentages remain in force when the deduction is carried forward into future tax years. In any case, the total deduction for both current year and carry forward charitable contributions cannot exceed 50% of the AGI for that year.



Appreciated Property and Non-deductible Contributions


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