GUIDELINES FOR CHARITABLE GIFTS OF GRAIN

Taxpayers should always consult with their tax preparer to determine the tax implication prior to making a gift. The following is not to be construed as specific tax advice. These are guidelines to assist in the mechanics of making charitable gifts of agricultural commodities.

The farmer can exclude the sale of the cash crop from income and deduct the cost of growing the crop. There is no deduction for a charitable contribution.

•  Available for cash basis farmers.

•  Crop share landlords cannot gift grain. Shares of crop are rental income that must be reported as income on their tax return.

•  The farmer must give up “dominion and control” of the commodity.

•  The farmer cannot sell the grain and order the proceeds to be sent to the charity. This would result in the transaction being considered a cash

   sale and cash donation since the farmer has not given up control of the property.

•  The farmer should not provide guidance to the charity regarding the sale of the commodity.

•  The charity assumes the risk after the transfer. These risks include storage, transportation and marketing costs as well as price risk.

•  The transaction must be well documented to show the charity as the owner (i.e. commodity is delivered and a warehouse receipt executed to the

   charity, or notarized letter of transfer for crops stored on the farm).

•  Grain can be donated in the year of production or a subsequent year.

•  Grain can be gifted at any time during the tax year.

•  The gift should be from unsold crop inventory. No sale commitment should be made prior to the gift.

•  The charity should retain the warehouse receipt and the original invoice showing the charity as the seller.

Steps

•  Contact Pastor Chris at the church office at (308) 234-1881 to arrange for your delivery location to have our information.

•  Farmer delivers grain to the elevator (or bin).

•  Farmer asks elevator to transfer X number of bushels to charity.

•  Charity authorizes sale and collects proceeds from commodity.

•  Farmer includes production expenses on tax return (in year paid) but not the sale of gifted bushels. The farmer does not take a charitable

   contribution itemized deduction on the amount of the sale.