If you are a farmer, a gift of grain or other crops, instead of a cash contribution, can be a very tax-efficient way for you to support a Catholic entity within the Des Moines Diocese. Contributing grain directly to charity, rather than selling the grain first and then making a cash contribution from the proceeds, can provide significant tax savings for you. By contributing the grain itself, you avoid income tax on the sale of the commodity but can still deduct the costs of producing the grain. In addition, you may reduce your self-employment tax and state taxes, too.
It is important to make certain that your contribution is a gift of the grain commodities, not just a receipt for grain in storage. In addition, you need to avoid directing when or how CFSWIA sells the commodity after you have made your gift. A simple letter from you to CFSWIA telling us that you are making the contribution, describing the commodity and amount, and asking us how we want it delivered is usually sufficient to establish what the IRS calls “dominion and control” of the grain by CFSWIA. We can help you prepare a letter and make certain that your contribution is well documented showing that CFSWIA became the owner of the commodity.
For example, if you were to make a $10,000 cash contribution to CFSWIA you would receive an income tax charitable deduction which would reduce your taxable income provided that you itemize your deductions (if you are among the 90% of taxpayers who claim the standard deduction, you receive no tax benefit from the charitable deduction). If, instead, you give 2,000 bushels of corn when the market price is $5.00 per bushel, your taxable income for the year will be reduced by $10,000, the amount you would have received had you sold those bushels. In addition, you may avoid self-employment and state taxes and still enjoy the tax benefits of deducting the expenses involved in the production of the commodity.
Your contribution of grain can be made at any time during the year, and you can make your gift in the year of production or any subsequent year, as long as you have neither sold nor made a commitment to sell prior to your contribution. Also note that you must be a farm operator or a materially participating landlord. Crop share landlords are not eligible because shares of crop are considered to be rental income for income tax purposes.
Once CFSWIA has received your gift of commodities, we will arrange for the sale and then direct the net proceeds to your fund of choice. You will have made a generous contribution to support the work of the Diocese of Des Moines and secured significant tax savings for yourself. Please contact us at (515) 237-5044 for more information.