What is the amount of Byron’s deduction assuming that he had purchased the stock for $10,500 last year on August 7, and the stock had a fair market value of $13,800 when he made the donation?

$10500

Explanation:

In a situation whereby an ordinary income property is being contributed for charitable purpose such as in the case of Bryon in the question, the deduction will be limited to the adjusted basis of the stock purchased.

The stock hasn't met the requirement for long term capital gain as it's for a short period and also less than a year. Assuming the stock was sold at that particular time the donation was made, he'll have made a gain of ($13,800 - #10,500 = $3,300).

Based on the above explanation, Byron’s charitable contribution deduction will then be:

= $13,800 – $3,300

= $10,500

you had the wrong answer

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