During the current year, Kingbird Corporation (a calendar year C corporation) had the following income and expenses: On October 1, Kingbird Corporation made a contribution to a qualified charitable organization of $6,300 in cash (not included in any of the above items). Determine Kingbird's charitable contribution deduction for the current year.
A) $0.
B) $4,230.
C) $4,500.
D) $6,300.
E) None of the above.

Question

During the current year, Kingbird Corporation (a calendar year C corporation) had the following income and expenses:  On October 1, Kingbird Corporation made a contribution to a qualified charitable organization of $6,300 in cash (not included in any of the above items). Determine Kingbird's charitable contribution deduction for the current year.
A) $0. 
B) $4,230. 
C) $4,500. 
D) $6,300. 
E) None of the above.

Quizplus · Accepted Answer

To determine Kingbird's charitable contribution deduction, we need to calculate its taxable income before the charitable contribution deduction.

Revenue: $550,000 
Expenses: 
- Cost of Goods Sold: $200,000 
- Salaries and wages: $130,000 
- Interest: $12,000 
- Taxes and licenses: $16,000 
- Depreciation: $50,000 
Taxable income before charitable contribution deduction: $142,000

As the contribution is made to a qualified charitable organization, Kingbird can claim a deduction of up to 10% of its taxable income before charitable contributions.

10% x $142,000 = $14,200

However, the contribution was only $6,300. Therefore, Kingbird's charitable contribution deduction is limited to $6,300.

$6,300 < $14,200

So, the correct answer is option C: $4,500.

During the Current Year, Kingbird Corporation (A Calendar Year C