Investing in Owen County
GIFTS OF GRAIN
A New Giving Option
Giving (Grain) Today … Growing Tomorrow
How it Works
When you donate a gift of grain it will benefit your community forever. Here is an example of a $10,000 gift of grain:
Please Note - Crops produced for sale in a farming operation are considered “ordinary income property.” The deduction for a gift of ordinary income property to a charitable organization is limited to the lesser of fair market value or cost basis. Typically, the cost basis has already been deducted from income as the costs of producing the crops; thereby commonly the cost basis is zero (0), making the gift, in effect, non-tax deductible.
As each individual farmer’s situation is different, you should consult your professional advisor for legal and tax advice on how a gift of grain to the OCCF may apply to your circumstances. Nothing in this article should be construed as providing you with legal or tax advice. If you would like to donate a gift of grain your local elevator will provide the appropriate donation form.
Tips for Making Gifts of Grain
Timing – Gifts of grain to charity can be made from the current or previous year’s harvest.
Unsold Commodity – The gift must be from unsold crop inventory with no prior sale commitment. A farmer will gift the grain to the Owen County Community Foundation (OCCF), or designate a specific charitable fund within the Foundation.
Physical Delivery – Be sure the gift is farm commodities, not warehouse receipts, which could be considered a cash equivalent. The OCCF must be able to demonstrate “control and dominion” over the gifted property.
Retention of Control – Farmers cannot offer guidance in the transfer agreement as to retention or sale of the gifted commodity.
Documentation – the transaction must be well-documented to show the OCCF as owner of the grain. A Gift of Grain Notification Form and a properly executed warehouse receipt in the OCCF’s name must be completed. The original sales invoice for the gift of grain must list the OCCF as the seller.
Storage & Transportation Costs – After the transfer of ownership of the grain. The OCCF assumes the risks of storage, marketing, and transportation costs, as well as price risk.
Crop Share Landlords – Crop share landlords cannot gift grain. Shares of crop are rental income that must be reported as income on their tax return.
Tax Outcomes – Costs associated with growing the crops may not be deductible if those costs are incurred in the same year as the year of the donation of the grain. Therefore, gifts made from the prior years’ unsold crop inventory may offer the best tax results. Tax outcomes are also impacted by whether a farmer does cash or accrual accounting. See you tax advisor to determine if this is the best course of action for your circumstances.
Storing Grain on Farm – Grain can be stored on a farm rather than being delivered to an elevator and still be gifted to the OCCF. A notarized letter of grain transfer should be prepared and delivered to the OCCF. This will take the place of a warehouse receipt.
Farm Corporations – The benefits described in article apply to the calendar year-cash basis sole proprietorships. Corporations are not treated the same way from a tax perspective. Ask your tax professional to see if your farm operation can benefit from a charitable gift.
Government Payments Limitation Caps – The gift of grain will not count as income in government payments limitation cap.
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Do you have questions about making a Gift of Grain? Our staff is ready to help you find the best option for your charitable giving.
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