Gifts of Grain
Maximize your tax benefits while
supporting your favorite charities
The GCMH Foundation is pleased to make our supporters who are agricultural producers aware of the tax savings available when charitable gifts are made using commodities. Replacing the cash donations you give to qualified charities each year with gifts of grain can increase the amount of tax savings that you realize through charitable giving. There are two reasons for this:
Giving a commodity means this is a sale that your business never realized. This income will not be recorded on your taxes and you will also save the money that you would have paid in self-employment tax on that amount.
Recent changes to federal tax laws have increased the federal standard deduction to $13,850 for an individual or $27,700 for a couple who files taxes jointly. That means your charitable gifts of cash/checks may not qualify to be itemized. Please check with your tax preparer to see how this change affects you.
Why Donate Grain?
By providing a gift of grain to the Grundy County Memorial Hospital Foundation, you are maximizing your impact on high quality local healthcare while minimizing the tax consequences of the grain that you've donated. Your crops are the result of the hard work you've invested in your farm operation. By providing a portion of what you've grown to the hospital Foundation, you're investing in the medical technology, equipment, and other resources that will sustain Grundy County Memorial Hospital as a first class health care organization for generations to come.
How does it work?
Choosing to donate a gift of grain to a charity is simple.
To ensure compliance with tax laws, farmers wishing to donate a commodity should follow these steps:
- Notify the GCMH Foundation of your intended gift by phoning or writing us. Describe what the commodity is and the quantity being contributed. Retain a copy of the letter for your records. (The gift should be from unsold crop inventory with no sale commitment made prior to the gift.)
- The GCMH Foundation will set up an account at the elevator you intend to use.
- Transfer the grain as a gift to the Grundy County Memorial Hospital Foundation by having the elevator send a warehouse storage receipt to the Foundation. The elevator's receipt must show the Grundy County Memorial Hospital Foundation as the owner of the grain. Important: please notify the GCMH Foundation when you have delivered the grain to the elevator.
- The GCMH Foundation will provide you with a donation receipt for your gift. Do not report the donation on your tax forms as you are not entitled to any additional deduction. The tax benefit comes from deducting your production expenses as usual and not reporting the sale on Schedule F.
- The GCMH Foundation will sell the grain and receive the sale proceeds. Any sales invoice will name the Grundy County Memorial Hospital Foundation as the seller of the grain. Per Internal Revenue Service (IRS) rules, it is necessary that the charity had 'dominion and control' of the commodity.
Here is an illustration of how giving through a gift of a commodity can reduce your tax obligation.
Freddie and Frieda Farmer normally make $10,000 in annual contributions to their favorite local charities. This year, they chose to give this amount by giving 2,000 bushels of corn when the market price is $5.00 per bushel. When they deliver the corn to the elevator, they advise the elevator they want to give the grain to five qualified (tax exempt) charities. Assuming the couple has a taxable income of $100,000, the following tax savings will apply:
- Assuming the Farmers have not exceeded the maximum self-employment tax limit, they will save 15.3%, or $1,530 of self-employment tax.
- They will save 22%, or $2,200 of federal income tax and 8.53%, or $853 of Iowa state income tax.
The total tax savings from the gift of the corn is $4,583. If they are able to itemize, the only savings from $10,000 of cash gifts would be $2,200 of federal income tax and $853 of state income tax. If they are unable to itemize on their tax return, they would not recognize a tax savings by making a cash gift.
Each agricultural producer's situation is different. Please consult your professional tax advisor on whether using a gift of grain can benefit you. Some agricultural entities may not benefit from gifts of grain because they are not treated the same way from a tax perspective, for instance, this may include crop share agreements and C-corporations.
Disclaimer: This content is for informational purposes only and does not constitute legal or tax advice. Please consult your professional advisor for legal and tax advice specific to your situation.
Gifts of Grain serve as a way for agricultural producers to maximize tax benefits while supporting the Grundy County Memorial Hospital Foundation. How will you Touch a Life?
Contact the GCMH Foundation
201 East J Avenue
Grundy Center IA 50638
319-824-4152
Email: GCMH_Foundation@unitypoint.org