Archive for August, 2007

Did you know that some farmers can save taxes by giving commodities instead of cash?  Farm commodities, such as grain, livestock, milk and eggs make valuable gifts to your local church and Village Missions. Besides being first-fruit gifts, farm commodity gifts are simple to make.

Here’s an example:

In 2003, Amanda Smith, a farm operator, donated 1,000 bushels of soybeans to her church. The donation represented the production from 15 acres. Amanda’s cost of production was $4,000, and the FMV at the time of the donation was $5,000. For 2003, Amanda was on the cash method of accounting.

Amanda will deduct the $4,000 of production expense on her 2003 Schedule F. She will not report any income from the gift nor will she deduct any charitable contribution. Assuming Amanda is married, does not have enough itemized deductions to exceed her standard deduction, is in a 25% federal income tax bracket, and a 3% state income tax bracket, her tax savings is $2,007 more than selling the beans and making a cash donation of $5,000 to her church.

Thanks to: Farmdoc, University of Illinois

http://www.farmdoc.uiuc.edu/legal/articles/ALTBs/ALTB_04-08/ALTB_04-08.html

Village Missions is not engaged in rendering legal, accounting or other professional service.  Farmers should consult with a competent professional tax advisor prior to making a gift.