Calculate the deduction taken in 2024 and 2025 if Gray gifts the land to charity in 2024.

Question

In 2024, Gray Corporation, a calendar year C

corporation, holds a $75,000 charitable

contribution carryover from a gift made in 2019.

Gray is contemplating a gift of land to a qualified

charity in either 2024 or 2025. Gray purchased the

land as an investment five years ago for $100,000

(current FMV is $250,000). Before considering any

charitable deduction, Gray projects taxable income

of $1 million for 2024 and $1.2 million for 2025.

• Calculate the deduction taken in 2024 and 2025 if

Gray gifts the land to charity in 2024.

• How much carryforward remains after 2025?

Answer 1

Current contribution: FMV of land = $250,000

Carryover from 2019 = $75,000

Total contribution available for 2024 deduction = 250,000 + 75,000 = $325,000

10% of taxable income before charitable deduction

Taxable income = $1,000,000

Limit = 10% × 1,000,000 = $100,000

1. Deduction limited to $100,000
2. Use carryover first, then current year gift (IRS rule uses carryovers first to maximize current deduction)

So:

1. Use $75,000 carryover
2. Remaining allowed deduction = $100,000 - 75,000 = $25,000 from 2024 gift

Contribution carryover from 2019: 75,000 - 75,000 used = $0

Contribution carryover from 2024 gift: 250,000 - 25,000 = $225,000 carried forward to 2025

Taxable income = $1,200,000

Limit = 10% × 1,200,000 = $120,000

1. Carryover available = $225,000 (from 2024 gift)
2. Deduction limit = $120,000

So deduction allowed = $120,000 in 2025

Remaining carryforward = 225,000 - 120,000 = $105,000

Deduction in 2024: $100,000

Deduction in 2025: $120,000

Carryforward remaining after 2025: $105,000

If Gray gifts the land in 2024, a large portion of the deduction is spread over years due to the 10% limit.