In year 1 (the current year), Angel Corp. made a charitable donation of $550,000 to the Roof Over Peoples' Head Foundation (a qualifying charity). For the year, Angel reported taxable income of $4,000,000 before deducting any charitable contributions and before deducting its $90,000 dividends received deduction. Required: A. What amount of the $550,000 donation is Angel allowed to deduct for tax purposes in year 1? B. In year 2, Angel did not make any charitable contributions. It reported taxable income of $7,00,000 before any charitable contribution deductions and before a $120,000 dividends received deduction. What book-tax difference associated with the charitable contributions will Angel report in year 2? Is the difference favorable or unfavorable? Is it permanent or temporary
In year 1 (the current year), Angel Corp. made a charitable donation of $550,000 to the Roof Over Peoples' Head Foundation (a qualifying charity). For the year, Angel reported taxable income of $4,000,000 before deducting any charitable contributions and before deducting its $90,000 dividends received deduction.
Required:
A. What amount of the $550,000 donation is Angel allowed to deduct for tax purposes in year 1?
B. In year 2, Angel did not make any charitable contributions. It reported taxable income of $7,00,000 before any charitable contribution deductions and before a $120,000 dividends received deduction. What book-tax difference associated with the charitable contributions will Angel report in year 2? Is the difference favorable or unfavorable? Is it permanent or temporary
Charitable contribution:
A contribution made by a tax payer to the qualified charitable organization is known as charitable contribution. It is a tax-deductible expense only if it is made to a qualified organization. Contribution reduces the tax liability of the individual and the corporates.
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