Mr Haugh Owns a Sporting Goods Store as a Sole

question 17

Multiple Choice

Mr. Haugh owns a sporting goods store as a sole proprietorship. This year, he donated baseball equipment (bats, gloves, balls) to the local YMCA to use in their community sports programs. His cost basis in the inventory items was $45,700, and their retail value was $68,200. Which of the following statements about this donation is true?

• A) Mr. Haugh must recognize $22,500 ordinary business income and is allowed a $68,200 business deduction.
• B) Mr. Haugh must recognize $22,500 ordinary business income and is allowed a $68,200 charitable contribution deduction.
• C) Mr. Haugh is allowed a $45,700 charitable contribution deduction.
• D) Mr. Haugh is allowed a $68,200 charitable contribution deduction.