Ag Gifts a Tax-Wise Option

More farmers and ranchers are considering ag commodities as a preferred method of giving, especially during an environment of changing tax implications. Pam and Mike Abbott, who raise cattle in Keith County, recently made this type of gift. Pam is a past chair of the Keith County Foundation Fund (KCFF) and current chair of Nebraska Community Foundation's statewide board of directors.

Giving a portion of your product is a great way to share the bounty with the causes closest to your heart. By contributing commodities like corn or cattle, farmers and ranchers can save significantly on taxes while strengthening the mission of their local community fund.

"We welcome anything that will help our dollars go further," Pam said. "In 2018, as the new tax law was being rolled out, the idea of charitable gifts of ag products piqued our interest. Using this method to both make a charitable gift and avoid taxable income seemed too good to be true."

She said NCF helped make the transfer of livestock to be sold for the benefit of KCFF simple. "Basically, all we did was sign a one-page gifting form outlining the few details and presented it to our local sale barn. The sale barn was pleased with how easy the process was, too."  

At that time, KCFF was conducting a campaign to raise matching funds for a major challenge grant to its unrestricted endowment. "Mike and I wanted to make a larger gift than we would normally make on an annual basis. The dollars we saved by not having to claim the income was welcomed."  Since that time, the Abbott's have repeated their giving through commodities gifting.

Pam advised people who are considering charitable giving to keep in mind the different charitable giving tools available."I would encourage other producers to think about gifts of ag commodities and even assets. Knowing all of the options for giving can be overwhelming, but staff at NCF is there to help navigate and explain these many tools and help tailor however needed to meet individual's intent." 

Instead of selling the ag commodity, the producer transfers ownership of the livestock or grain directly to Nebraska Community Foundation for the benefit of their local affiliated fund. The producer can then claim all their production costs as deductible expenses for income tax purposes. When a producer transfers legal ownership to a charity before it is sold, the producer will not have taxable income from a sale, thus minimizing taxes. Tax savings may be realized on federal income tax, state income tax and self-employment tax, depending on the producer's specific circumstances.

It is important to first check with your professional advisor to determine whether a contribution of grain or livestock is appropriate for your tax situation. It is also important that you notify Nebraska Community Foundation in advance of making your gift of commodities as there are specific (but simple) procedures that must be followed. Gift of Grain and Livestock forms are available through members of the local Fund Advisory Committee.

You can also visit Nebraska Community Foundation's Gift Planning website - www.ncfgift.org -  to download the necessary forms. You can also find details on the benefits and process of making a charitable gift of grain or livestock, as well as other out-of-the-box giving methods beyond cash. Nebraska Community Foundation is also always available to point you in the right direction at 402.323.7330 or [email protected].

For information on how you can give back to your hometown, contact Nebraska Community Foundation's Office of Planned Giving, 402.323.7330 or [email protected].