Charitable gifts of livestock are options for tax savings
Farmers and ranchers are enjoying some of the highest commodity prices we have seen in years. Some producers are choosing to share their good fortune by donating portions of their crops or livestock directly to charity. In addition to benefiting their communities or favorite charities, many ag producers are able to benefit from tax savings that may be greater than if they had sold the commodity and then donated a portion of the proceeds.
“This is a great time to think about a charitable gift of commodities, whether its cattle or corn or other grain,” said Jana Jensen. Jensen lives on her family’s ranch near Bingham, Nebraska. She works with the Nebraska Community Foundation as its Director of Community Fund Development-Western Nebraska.
“Instead of selling the commodity, the producer transfers ownership of the livestock or the grain directly to the charity. The producer can then claim all of their production costs as deductible expenses for income tax purposes,” Jensen said.
This is appealing to many producers who have given gifts of grain or livestock through the Nebraska Community Foundation (NCF). 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.
Last year NCF helped 15 producers make charitable gifts totaling nearly $57,000 to eight affiliated fund communities. The majority of these were gifts of grain. However, with the current strong cattle market, NCF expects more livestock contributions.
Al Svajgr of Cozad honored his parents by making a gift of market cattle to the Diller community through the Nebraska Community Foundation.
“What an easy way to donate a significant gift,” said Svajgr. “I encourage any livestock producer to consider such a gift in these days of profitability and the good times we are currently enjoying. The self-satisfaction of giving back to your community can be, and for me was, overwhelming,” Svajgr said.
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 livestock or grain 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. For further information, visit NCF’s website.