Heron Corporation, a calendar year C corporation, had an excess charitable contribution for 2013 of $5,000. In 2014, Heron made a further charitable contribution of $20,000. Heron's 2014 deduction is limited to $15,000 (10% of taxable income). The 2014 contribution must be applied first against the $15,000 limitation.

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The deduction for charitable contributions in a given year is limited to a percentage of the corporation's taxable income. Any excess charitable contributions can be carried forward and deducted in future years. In this scenario, Heron Corporation had an excess charitable contribution in 2013, meaning it could not fully deduct the entire amount in that year. When the corporation made an additional contribution in 2014, the deduction was limited to 10% of taxable income, which was $15,000. Therefore, the 2014 contribution of $20,000 must be applied first against the $15,000 limitation, so only $5,000 can be carried forward to future years.

Heron Corporation, a Calendar Year C Corporation, Had an Excess