During the current year,Kingbird Corporation (a calendar year C corporation) had the following income and expenses: Income from operations $200,000 Expenses from operations 140,000 Dividends received (15% ownership) 15,000 Domestic production activities deduction 2,000 On October 1,Kingbird Corporation made a contribution to a qualified charitable organization of $9,000 in cash (not included in any of the above items).Determine Kingbird's charitable contribution deduction for the current year.
A)$9,000
B)$7,500
C)$6,650
D)$6,450
E)None of the above

Question

Quizplus · Accepted Answer

The maximum deduction for charitable contributions made by a C corporation is 10% of its taxable income before the deduction for charitable contributions (up to a certain limit). In this case, Kingbird Corporation's taxable income before the charitable contribution deduction is $200,000 - $140,000 - $2,000 = $58,000. Therefore, the maximum charitable contribution deduction is $5,800. However, the corporation contributed $9,000, which is higher than the maximum amount allowed. Therefore, the deduction is limited to the maximum amount of $5,800. However, since the corporation is allowed to carry forward any excess contributions for up to 5 years, the remaining $3,200 can be carried forward to future years. Therefore, the charitable contribution deduction for the current year is $5,800, which is option B).

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