If sell grain and contribute cash...................must pay SE tax on sale, and then must itemize to get offsetting deduction for income tax purposes.
If contribute grain..............incur no SE tax, and can use standard deduction.
Few farmers itemize, since WRONGFULLY they take property taxes and interest related to the residence (or the rent related to the residence if renting the home farm) as farm expense. Those two expenses is what usually favor itemizing.
Some would say that is double dipping...............
Example:
Assume contribution of 2000 value of grain.
Assume property taxes and interest related to residence total 8000.
If contribute grain..........saves 2000 x 15% = SE tax 300.
.......... saves 2000 x 15% = income tax 300.
Total reduction in taxes..............600.
If sell grain, and contribute cash............. Costs SE tax 2000 x 15% = 300.
..........Calculation of TAXable income:
Adjusted gross increases due to increased sales 2000
use standard deduction, which does not increase.........
and itemized is still less than allowable standard 0 net increase in taxable income 2000
Net increase in tax 300.
to make contribution 600.
Charitable donation question
