• Ed has a collection of old clothing. He received it as a gift from his grandfather two years ago. His grandfather thought the clothing was over 200 years old and a valuable antique. On December 31, 2019, Ed decides to donate the clothing to a qualified charity. The charity personnel search online for information on the clothing and believe it is antique. They believed the fair market value was approximately $3,000 and provided Ed with a receipt. Assume Ed’s basis is $0.00. Which statement is most accurate?

a) The clothing is ordinary income property. The amount of the deduction is equal to the FMV of the property less the amount of income that would have been reported if the property was sold. Ed will have to wait for the charity to sell the clothing to determine the amount of the deduction.

b) The clothing is ordinary income property. The amount of the deduction is equal to the FMV of the property less the amount of income that would have been reported if the property was sold. Ed will be entitled to a deduction of $3,000 upon his delivery of the property to the charity.

c) The clothing is capital gain property. The amount of the deduction is equal to FMV of the property.

d) The clothing is capital gain property. The amount of the deduction cannot be determined without more information regarding the nature of the charity and their use of the donated property.

e) None of the above

Answer rating: 100% (QA)

1 ENone of the above Gifts received are not considered for income t... View the full answer