Where Form 1120 C Limitation 2023-2024

Hello and welcome to chapter 17. This is Professor Farmer. In this session, we will look at the charitable contributions made by corporations. A corporation, being a legal entity, can make contributions just like an individual. So, the contributions may be deductible if certain conditions are met. For a corporation on accrual basis, there is an exception that allows recording a contribution before paying it, as long as it is authorized by the Board of Directors by the end of the year and paid within two and a half months before filing taxes. Once these conditions are met, corporations can deduct accrual charitable contributions. However, individuals are not allowed to deduct contributions in this manner. The deductible amount for a property contribution depends on the type of property contributed. For long-term capital gain property, the fair value of the property can be deducted, assuming it does not exceed any limitations. There are exceptions depending on the organization and how they use the property. For ordinary income property, such as inventory, the deductible amount is the lesser of the fair market value or adjusted basis. The charitable contribution deduction for corporations is limited to ten percent of taxable income before various deductions. Unused contributions exceeding the ten percent limitation can be carried forward for up to five years. In the following year, current contributions are deducted first before using any carried forward contributions. Now let's look at a couple of examples to better understand how this works. On December 31, 2029, Blue Company, a calendar year accrual basis partnership, authorized a $5,000 donation to the Atlanta Symphony Association. Because Blue is a partnership, the contribution cannot be deducted until 2015. However, if Blue were a corporation and the contribution was authorized by the board on December 29, they can claim the...