Which asset is eligible for a charitable contribution deduction based on its market value?

The correct choice indicates that real estate appreciated over one year is eligible for a charitable contribution deduction based on its market value. When an individual donates real estate that has appreciated in value, they can generally deduct the fair market value of the property at the time of the donation, provided it has been held for more than one year. This benefit is designed to encourage donations of appreciated assets, as it allows taxpayers to receive a deduction that reflects the current worth of the asset rather than its original purchase price, which may be lower.

This makes the contribution advantageous for both the donor, who can leverage the higher market value for a greater deduction, and for the charity, which may benefit from a more valuable asset. Moreover, the taxpayer does not recognize capital gains on the appreciated property when it is donated, which can provide additional tax savings.

In contrast, while stock held at a loss can also be donated, the deduction would be limited to the fair market value only if it has appreciated. Clothing donated by a business typically allows for a deduction at cost basis and not at market value, especially if it is used clothing. Cash donations can often be deducted at their face value, but this question specifically pertains to contributions based on market value, which does not apply to