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Auburn Company manufactures and sells furnishings for hospitals (e
Auburn Company manufactures and sells furnishings for hospitals (e.g., special needs bathroom fixtures). In the current year, it donates some of its inventory to a newly constructed hospice. The hospice is adjacent to a cancer treatment center and is intended to care for indigent and terminal patients. The property donated has an adjusted basis of $40,000 and a fair market value of $90,000. What is the amount of the charitable contribution deduction if Auburn is a:
a. Sole proprietorship?
Expert Solution
Computation of charitable contribution deduction if Auburn is a Sole proprietorship:
Given,
Adjusted Basis = $40,000
Fair Market Value = $90,000
Here, Deduction on Charitable Contribution is restricted to lesser of Adjusted Basis or Fair Market Value. So, Charitable contribution deduction if Auburn is a Sole proprietorship is $40,000.
Note: Inventory is considered as ordinary income property.
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