Skip to main content
Level 5
September 1, 2022

S- Corp donation of Land

  • September 1, 2022
  • 1 reply
  • 18 views

I am hoping someone can help.. 

I have an S-corp client that donated 3 parcels of land to a 501 (c) (3 ) organization .  I am not sure exactly how to do this in Lacerte.   3 shareholders, 3 parcels of land .    My example below is using the numbers from one of the pieces of land.   

I have read that the charitable contribution will flow thru on the K-1 as a separately stated deduction.  There is a basis limitation, rest will carryover.   

The land has been appraised at about $169, 000 each.    The basis of the land on the books is approximately $80,000.00 each.   (Using just one piece for an example. )    $80,000 will pass thru to the shareholder on the K-1 as a donation, but limited by basis, rest will carryover for future years.    

The appreciation in the property , $89,000.00  (169,000 - $80,000) will pass through to the shareholders and will be available to be claimed on the personal return.    The appreciation of the contributed property does not reduce basis.  

I hope what I am saying is correct so far.  

If it is, I am unsure how to enter this correctly into Lacerte.    I need to get the land off the books.  It is not on the depreciation schedule, it is in inventory.  The S-Corp is a builder and the Land & improvements are in inventory until a house sells.   In this case no house , no sale.  

Is the $89,000 the separately stated deduction?  Does this go on screen 25?     If so, how do I show the portion of the donation that is in inventory?   Is screen 20 where I put the basis part of the donation?    

I am really hoping someone can help.      Many Many thanks ... 

 

This topic has been closed for replies.

1 reply

sjrcpa
Level 15
September 2, 2022

The charitable contribution deduction for a noncash contribution is limited to basis where the donated item would generate ordinary income if sold, i.e inventory.

The more I know the more I don’t know.
jlew1229Author
Level 5
September 2, 2022

yes, The deduction is based on the FMV of the contribution, the adjusted basis portion of the contribution is limited to the shareholder basis, and the appreciated difference will pass to them to use on their personal return     I am not sure how to put the contribution into Lacerte.   I am guessing in 2 places? .   One place for the basis limitation amount of adjusted basis of $80,000 and a second place so they can take the appreciated difference of $ $89,000 on their personal return.  (169,000 FMV- 80,000 Basis).   Does anyone know what screens in Lacerte I would enter this data?   

Ruling 2008-16 says the shareholder's basis is not reduced by the appreciation of the contributed capital.   The shareholder is able to take it on their personal return.   

Many thanks to the help.   Hopefully someone knows what screens to put these entries into?  

 

sjrcpa
Level 15
September 2, 2022

If the land is inventory with a basis of $80,000, the charitable contribution is $80,000.

The FMV is not deductible.

The more I know the more I don’t know.