Norwood Corporation is an accrual-basis taxpayer. For the year ended December 31, 2014, it had book income before tax of $500,000 after deducting a charitable contribution of $100,000. The contribution was authorized by the Board of Directors in December 2014, but was not actually paid until March 1, 2015. How should Norwood treat this charitable contribution for tax purposes to minimize its 2014 taxable income?
a. It cannot claim a deduction in 2014, but must apply the payment against 2015 income.
b. Make an election claiming a deduction for 2014 of $50,000 and carry the remainder over a maximum of five succeeding tax years.
c. Make an election claiming a deduction for 2014 of $60,000 and carry the remainder over a maximum of five succeeding tax years.
d. Make an election claiming a 2014 deduction of $100,000
Answer: C
Tax
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