If you are an operating farmer, you may want to reconsider your charitable cash gift to your church, FFA, or local library. Take some time to explore the option of gifting grain directly to the charity or tax exempt organization.
Charitable contributions can be made in either cash or property. But cash gifts are exposed to a myriad of taxes before the proceeds are available to your organization while grain donations are not.
According to Jim Locher, Department of Agricultural and Consumer Economics at the University of Illinois donating the bushels instead of the cash from the bushels means that:
- The value of the donated grain is not included on Schedule F.
- The expenses related to the production of that grain stay on Schedule F in the year paid.
- There is not a charitable contribution deduction for donated grain because no income is recognized on the donation.
- Federal, state and self-employment tax are not paid on the value of the donated grain.
Additionally, your yield records are unaffected by a gift of grain, preserving your baseline for years to come.
Certainly, you need to discuss this option with a tax advisor before jumping in with both feet, but the idea of donating grain over cash seems a wise one for both the charity and you, the donor.
Visit Locher’s farmdocDAILY site for more information on this charitable giving option.
Learn more about a current Illinois Corn effort utilizing this method of giving here.