During the Current Year, Gray Corporation, a C Corporation in the Financial

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. Gray's total amount of charitable contributions is $270,000 [$20,000 (stock) +
$250,000 (painting)], computed as follows:
Stock: this is ordinary income property, because a sale of the stock would not result in a long-term capital gain or a § 1231 gain for Gray (i.e., STCG). Thus, the amount of the contribution is the stock's basis, or $20,000.
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?