Thank you for your interest in making a grain donation to Barclay College. The tax advantages of donating commodities far outweigh those for a contribution of cash. For many cash basis farmers, significant tax savings can be achieved by donating crops directly to a charitable organization. By contributing crops to Barclay College, the cash basis farmer avoids including the sale of the cash crop in income. You can also deduct the cost of growing the crop, which results in savings self employment tax, federal income tax and state income tax.
The following are the steps you should follow in making sure the transaction is executed properly. Always consult with your professional tax and legal advisors to determine tax implications.
- Present a letter to Barclay College, telling us you’re making a contribution of a commodity. The letter should describe the commodity and the quantity being contributed. The letter should ask Barclay College where and when they want the commodity delivered. In “IRS” speak, Barclay College must have dominion and control of the commodity.
- Keep a copy of the letter. Make sure you get a receipt from Barclay College for the amount of the donation.
- Do not report the donation on schedule A. The farmer is not entitled to any additional deduction. The tax benefit comes from deducting the production expenses and not reporting the sale on schedule F.
If you have any questions, please contact Larry Lewis by phone (620.862.5252) or email.