Problem $4-30($LO$.6)$

Julieta Simms is the president and sole shareholder of Simms Corporation. Julieta plans for the corporation to make a charitable contribution to the University of Washington, a qualified public charity. She will have the corporation donate Jaybird Corporation stock, held for five years, with a basis of $$11,000$ and a fair market value of $$25,000.$ Julieta projects a $$310,000$ net profit for Simms Corporation in $2024$ and a $$100,000$ net profit in $2025.$ Julieta calls you on December $10,2024,$ and asks whether Simms should make the contribution in $2024$ or $2025.$

Complete the letter advising Julieta about the timing of the contribution.

For the present value computations, assume a $5\%$ discount rate and the following present value factors: for $2025,0\mathrm{.}9524$; for $2026,0\mathrm{.}9070$ ; and for $2027,0\mathrm{.}8638.$

If required, round your computations to the nearest dollar.

SWFT$,$ LLP

$5191$ Natorp Boulevard Mason, OH $45040$

December $18,2024$

Ms$.$ Julieta Simms, President

Simms Corporation

$1121$ Madison Street

Seattle, WA $98121$

Dear Ms$.$ Simms:

On December $10,$ you asked me to advise you on the timing of a contribution by Simms Corporation to the University of Washington. My calculations show that the corporation will maximize its tax savings by making the contribution in

$$

If the corporation makes the contribution in $2024,$ it can deduct $ $$ x as a charitable contribution, which will save $ $x$ in Federal income tax. However, if the corporation makes the contribution in $2025,$ the percentage limitations applicable to corporations will limit the $2025$ deduction to $ $$ X $.$ The corporation will save $ $$

$$ be able to deduct $ $x$ of the carryover in $2026$ and the remaining $ $0$ X of the carryover in