Gifts of Grain
Iowa farmers can save significant taxes by contributing commodities such as corn and soybeans to their favorite nonprofit.
Why Donate Grain Directly?
Cash charitable contributions are deductible only as an itemized deduction from adjusted gross income which results in reducing federal income tax only. Many farmers do not itemize deductions because the standard deduction has greatly increased over the years.
By transferring legal ownership of grain to the Iowa Agriculture Literacy Foundation, the producer avoids having to include the sale of the crop in income, which results in savings on federal and state income tax and self-employment tax.
Use Professional Advisors
Donating grain can be part of a great tax reduction strategy. Consult with a professional tax or legal advisor to determine tax implications prior to making a gift due to rapidly changing tax laws.
Crop Share Landlords
Shares of crop are categorized as rental income and must be included as reportable income by the landlord, making the crop share landlord ineligible for maximum tax benefits from the gifting of grain.
Helpful Tips for Making Gifts of Grain
- Timing. Gifts of grain can be donated from the current or previous year’s harvest. Donate grain in a previous tax year to receive maximum tax advantages. Make the donation early in the year so there is no question it was from a prior year’s harvest.
- Unsold commodity. The gift should be from an unsold crop inventory with no prior sale commitment. A farmer will gift the grain to the Iowa Agriculture Literacy Foundation and IALF will decide what to do with it and when to sell it.
- Physical delivery. Be sure the gift is a farm commodity, not a warehouse receipt, which could be considered a cash equivalent. The charity must be able to demonstrate “control and dominion” over the gifted commodity.
- Retention of control. Farmers cannot offer any guidance in the transfer agreement as to the retention or sale of the gifted commodity.
- Documentation. A properly executed warehouse receipt in the IALF name or a notarized letter of transfer for crops stored on the farm is necessary. The original sale invoice should list IALF as the seller.
- Storage and transportation costs. After the transfer, IALF will assume costs of storage, marketing, and transportation of the gifted commodity.
Interested in making a donation of grain? Download and fill out the ‘Letter from Producer’ and provide it to the co-op or elevator when you deliver your crop. Or contact us at 515-331-4182 for more information.