Question

In December each year, Eleanor Young contributes 10% of hergross income to the United Way (a 50% organization). Eleanor, whois in the 28% marginal tax bracket, is considering the followingalternatives for satisfying the contribution.

	Fair Market Value
(1) Cash donation	$169,000
(2) Unimproved land held for six years ($25,350 basis)	$169,000
(3) Blue Corporation stock held for eight months ($25,350basis)	$169,000
(4) Gold Corporation stock held for two years ($202,800basis)	$169,000

Eleanor has asked you to help her decide which of the potentialcontributions listed above will be most advantageous tax-wise.Evaluate the four alternatives and complete a letter toEleanor.

Determine the amount of the charitable contribution for eachoption.

	Charitable Contribution
Cash donation	$
Unimproved land held for six years ($25,350 basis)	$
Blue Corporation stock held for eight months ($25,350basis)	$
Gold Corporation stock held for two years ($202,800 basis)	$

Hoffman, Young, Raabe, Maloney, & Nellen,CPAs
5191 Natorp Boulevard
Mason, OH 45040

December 5, 2017

Ms. Eleanor Young
2622 Bayshore Drive
Berkeley, CA 94709

Dear Ms. Young:

I have evaluated the proposed alternatives for your currentyear-end contribution to the United Way. I recommend that you sellthe Gold Corporation stock and donate the proceeds to the UnitedWay. The four alternatives are discussed below.

A donation of cash, the unimproved land, or the Gold stock willresult in a $ charitable contribution deduction. Donation of theBlue Corporation stock will result in only a $ charitablecontribution deduction.

A direct contribution of the Gold Corporation stock will be apoor decision from a tax perspective in that thedecline in value is not deductible and the amountof the charitable contribution would be $. If you sell the Goldstock and give the proceeds to United Way, the donation of theproceeds will result in a $ charitable contribution deduction. Inaddition, sale of the stock will result in a $ long-term capitalloss. If you have capital gains of $ or more this year, you can usethe entire loss in computing your current taxable income. If youhave no capital gains this year, you can deduct $ of the capitalloss this year and carry over the remaining $loss to futureyears.

You should make the donation in time for ownership to changehands before the end of the year. Therefore, I recommend that younotify your broker immediately so that there will be no problem incompleting the donation on a timely basis.

Please let me know if you have any questions or would like todiscuss my recommendation and the related analysis. Thank you forconsulting our firm on this matter. We look forward to serving youin the future.

Sincerely,

Nora Oldham, CPA