Do charitable deductions apply to long term capital gains, or only ordinary income?

Question

Let's say I have an income of $100k and long term capital gains of $500k. If I make a charitable donation of $200k cash, will that first reduce my ordinary income by $100k and then my LTCG by $100k, or does it only apply to my earned income? Basically, do donation amounts greater than my ordinary income amounts still provide any tax benefit?

Answer 1

You'll need to follow the capital gains tax calculation worksheet. The deduction will be applied first to the ordinary income (by reducing the total taxable income), and then to the capital gains (in the worksheet, line 5).