During the Current Year, Gray Corporation, a C Corporation in the Financial

question 1

Essay

During the current year, Gray Corporation, a C corporation in the financial services business, made charitable contributions to qualified organizations as follows:
? Stock (basis of $20,000, fair market value of $45,000) in Drab Corporation, held for six months as an investment, to the Salvation Army. (Salvation Army plans on selling the stock.)
? Painting (basis of $90,000, fair market value of $250,000), held for four years as an investment, to the Museum of Fine Arts. (The Museum plans on including the painting in its collection.)
Gray Corporation's taxable income (before any charitable contribution deduction) is $1.8 million.
a. What is the total amount of Gray's charitable contributions for the year?
b. What is the amount of Gray's charitable contribution deduction in the current year, and what happens to any excess charitable contribution, if any?

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Definitions:

Credit Sales

Sales made by a business where the payment is deferred to a later date, typically involving issuing an invoice to the customer.

Finished Goods Inventory

The completed products that are ready to be sold but have not yet been sold to customers.

Raw Materials Purchases

The acquisition of the basic materials and components needed for the production of goods.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor costs.