In the Current Year, Plum Corporation, a Computer Manufacturer, Donated

question 63

Multiple Choice

In the current year, Plum Corporation, a computer manufacturer, donated 100 laptop computers to a local university (a qualified educational organization) . The computers were constructed by Plum earlier this year, and the university will use the computers for research and research training. Plum's basis in the computers is $35,000, and their fair market value is $120,000. What is Plum's deduction for the contribution of the computers (ignoring the taxable income limitation) ?

• A) $35,000
• B) $70,000
• C) $77,500
• D) $85,000
• E) $120,000

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Definitions:

Bad Debts

Accounts receivable that are considered uncollectible and are written off as a loss.

General Operating Expenses

These are the day-to-day expenses necessary for the management and administration of a business, such as rent, utilities, and payroll.

Collections

The process of pursuing payment on debts owed by individuals or businesses, typically involving accounts receivable.

Credit Sales

Transactions where the buyer purchases goods or services on credit, agreeing to pay the seller at a later date, thus generating accounts receivable for the seller.