Example #1: Suppose you have an AGI of $100,000, you take the standard deduction (married, filed jointly) and you intend to give $10,000 in charitable contributions.
Action: Give grain rather than cash. The effective cost of your $10,000 donation will be $5,500.
Results: 45% tax savings. By giving grain, you will pay $2,500 less in federal income taxes, $500 less in state and local taxes (since your state does not allow charitable deductions) and another $1,500 in self-employment taxes. Total tax savings are $4,500. Use that money to offset the cost of your gifts or you can give the savings to charity. (go back)
Example #2: Suppose you are experiencing an especially profitable year and will be subject to a high marginal tax rate. With the ups and downs of income in farming, next year may not be as profitable. Consequently, you may be in a lower tax bracket and your contributions next year may produce smaller tax benefits.
Solution: Giving grain makes it possible to effectivelly exceed the 50% of AGI cap on charitible deductions. So, prepay your giving this year by giving grain. That way, even if income is down next year, you will be able to continue to give to your church or charities from your Donor Advised Fund. (go back)
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