Ag commodities gifts offer tax advantages
With the prospects of good yields and high grain prices, many grain producers are about to harvest a record income. Some may be looking for a way to minimize their tax liability while making a significant charitable gift to their community.
There are tax advantages for farmers and ranchers who make gifts of grain or livestock through a local community foundation fund.
When an agricultural producer transfers legal ownership of the commodity to a charity before it is sold, the producer will not have taxable income from a sale, thus minimizing taxes. Tax savings may be realized on federal income tax, state income tax and self-employment tax, depending on the producer’s specific circumstances.
Several community affiliated funds of the Nebraska Community Foundation have benefitted from gifts of grain and livestock, including the communities of Chambers, Diller, Shickley, Stuart, Stratton, Atkinson, Thedford and more.
The gift method has worked out well for Roland and Bev From, who recently retired from farming in the Rising City area.
“Gifting grain to a charitable fund not only feels good and does something good for the community, it is done with pre-tax dollars, and you don’t claim the income from the grain. So the gift is not taxable, and you can still claim all of your production costs as deductible expenses for income tax purposes,” said Roland From.
Producers should check with their accountants to determine whether a contribution of commodities is appropriate to their tax situation. They should then notify the Nebraska Community Foundation in advance of making a gift of commodities, as there are specific procedures that need to be followed to obtain the desired tax treatment of a gift of grain or livestock to a community foundation fund.
The Nebraska Community Foundation, established in 1993, helps rural Nebraska put charitable giving to work for community and economic development. There are 205 affiliated funds, serving 227 communities in 77 of Nebraska’s 93 counties. The Nebraska Community Foundation has reinvested $118 million for projects and programs throughout Nebraska.