Joe, Who Is in the 33% Tax Bracket in 2012

question 61

Essay

Joe, who is in the 33% tax bracket in 2012, expects to retire in 2013 and be in the 25% tax bracket. He plans to donate $50,000 to his church. Because he will not have the cash available until 2013, Joe donates land (long-term capital gain property) with a basis of $10,000 and fair market value of $50,000 to the church in December 2012. He reacquires the land for $50,000 in February 2013. Discuss Joe's tax objectives and all tax issues related to his actions.

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Definitions:

Self-Regulatory Association

An organization created by members of an industry to enforce fair and ethical practices within that industry without direct government intervention.

Better Business Bureau

A nonprofit organization focused on advancing marketplace trust, providing reviews on businesses, and handling consumer complaints.

Variable Costs

Expenses that change in proportion to the activity or volume of a business.