Running Head: MEMO 1
Milestone Two: Charitable Giving
MEMO 2
Subject: Charitable Giving
Nora has decided to contribute $ 70,000 in December of the year to the Boys and Girls
Club, which is a charitable and nonprofit entity. The purpose of the memo is to advise her on
charitable contributions and identify the tax advantages or limitations that may arise as a result
of her charitable giving.
Sources for evaluating appropriate tax situation
One of the appropriate sources that can be used for assessing Nora’s tax situation is
Internal Revenue Code (IRC) section 170. As per IRC § 170 (a) (1), the deduction for any
charitable contribution within the taxable year is allowed. IRC § 170 (b) (1) further states that
charitable contributions must be made to qualified entities, and the aggregate contribution
must not exceed 50 % of the contribution by the taxpayer for the specific taxable year. Based
on IRC § 170 (b) (2), the total deductions of a corporate must not exceed 10 % of the taxable
income of the taxpayer (U.S. Code § 170, n.d.). Another important source is Section 220.183
of Florida Statutes. As per Section 220.183 of Florida Statutes, a 50 % credit of community
contribution is allowed against any tax that is due for a taxable year (The Florida Statutes,
2023). It also states that no business is entitled to get over $ 200,000 in annual tax credit for
approved contributions that have been made in a single year. Similarly, IRS Publication 526 is
another resource that explains the procedure for claiming deductions for charitable
contributions (Internal Revenue Service., n.d.).
Research documentation
On the basis of IRC § 170 (b) (1), as Nora is an individual, she can deduct up to 50 %
of her adjusted gross income for a charitable giving that is made to a qualified entity. IRS
Publication 526 states that an individual has a limit on the deduction of 50 % of adjusted gross
income. The deduction rate may vary depending on the contribution amount. As Nora’s
adjusted gross income is likely to be around $ 350,000, her available contribution is $ 175,000
MEMO 3
at 50 %. If a contribution is made from her C-C Bakery business, the deduction rate is 10 % as
per IRC § 170 (b) (2) (U.S. Code § 170, n.d.). Such a limitation does not apply if she makes a
contribution from her personal account.
In Florida state, as per Section 220.183 (a-b), if someone makes a contribution to a
charity, they are eligible for a credit of 50 % of any tax due for the year. However, the
contribution must be specifically reserved and used for projects that have been covered in
Florida Statutes § 220.03 (1) (t).
Application of research
Based on the research, as Nora’s bakery business is performing well, she must make
charity to give back to the community. If she makes a contribution from her corporate account,
a 10 % limit is applicable. However, if she makes a contribution from her personal account,
there is a much higher limit, i.e., 50 %. Since Boys and Girls Club is a qualified charity
organization (Internal Revenue Service., n.d.), she is qualified for the 50 % limit deduction if
she makes a deduction from her personal account. By making a contribution from her personal
account, the threshold is $ 175,000 (50 %). By contributing $ 70,000, her adjusted gross
income will reduce from $ 350,000 to $ 2,80,000 after making the contribution deduction.
Furthermore, Nora can also derive benefit from Florida’s taxation rules and
arrangements since her adjusted gross income can be further decreased to $ 2,45,000 for the
purpose of sales tax. a
Findings and advice
Based on the analysis, Nora must make charitable contributions from her personal
account and not from her corporate account. The higher contribution threshold at the
individual level will help her to make a greater contribution from her personal account.
Moreover, she can take advantage of Section 220.183 of Florida Statutes, which can give rise
to tax-related benefits for her by reducing her adjusted gross income after making adjustments
MEMO 4
for her contributions to the Boys and Girls Club charity organization. The decision to
contribute to charity from her personal account can give rise to tax benefits.
Thank You
MEMO 5
Reference
Legal Information Institute. (n.d.). 26 U.S. Code § 170 - charitable, etc., contributions and
gifts. Legal Information Institute. https://www.law.cornell.edu/uscode/text/26/170
Statutes & constitution :view statutes : The 2022 Florida Statutes (2023, August 5).
http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_St
ring=&URL=0200-0299%2F0220%2FSections%2F0220.183.html
Publication 526 (2022), charitable contributions. Internal Revenue Service. (n.d.).
https://www.irs.gov/publications/p526
