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:

Yield

Yield is the income return on an investment, expressed as a percentage of the investment’s cost or current market value, commonly used for bonds and dividend-paying stocks.

Zero-Coupon Bonds

Bonds that don’t make periodic interest payments but are issued at a discount to their face value and redeemable for the face amount at maturity.

Expected Interest Rate

The anticipated rate at which interest is to be paid by a borrower for the use of money.

Municipal Bonds

Bonds issued by local government or municipalities, typically offering tax-exempt interest payments.