In its first year, Barsky Corporation made charitable contributions totaling $30,000. The corporation's taxable income before any charitable contribution deduction was $250,000. In its second year, Barsky made charitable contributions of $15,000 and earned taxable income before the contribution deduction of $300,000. Assume neither year is 2020. Required: Compute Barsky's allowable charitable contribution deduction and its final taxable income for its first year. Compute Barsky's allowable charitable contribution deduction and its final taxable income for its second year

Respuesta :

Answer:

Year 1:

total income before charitable contributions = $250,000

limit on charitable contributions = $250,000 x 10% = $25,000

taxable income after charitable contributions = $250,000 - $25,000 = $225,000

charitable contributions carried forward = $30,000 - $25,000 = $5,000

Year 2:

total income before charitable contributions = $300,000

limit on charitable contributions = $300,000 x 10% = $30,000

taxable income after charitable contributions = $300,000 - $15,000 - $5,000 = $280,000