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Hitting charitable ceiling in a down year

by on
in Small Business Tax,Small Business Tax Deduction Strategies

Q. My S corporation had a bad year in 2010. Could this affect my deduction for charitable contributions as a joint filer? M.P.R., San Bernardino, Calif.

A. Yes. Generally, deductions for charitable donations are limited to 50% of your “contribution base.” This is your joint adjusted gross income (AGI) computed without any regard to a net carryback loss.

If your AGI is lower than usual in 2010, you might bump up against the 50% limit on charitable contributions if you made large gifts. In addition, other special rules may apply (e.g., charitable gifts of appreciated property are generally limited to 30% of your AGI).      

Tip: Any excess charitable deduction can be carried forward for up to five years.

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