Agriculture and Philanthropy: Planting Seeds for Bright Futures

As a farm owner, you’ve built a wealth of assets that can come with a large tax bill when it’s time to step away from the business. Luckily, there are several ways to find a solution that works for you while also supporting Iowa State University – opportunities as unique and rewarding as the business of farming itself.

Gifts of land

Often, farmland is the most valuable asset a farmer owns. You can make a gift of land through:

• Outright giving, which allows for a charitable deduction at the time the land is transferred, avoids capital gains taxes, and reduces your taxable estate.
• A gift in your will or living trust, which allows you to retain the land for your lifetime so you have it if you need it, and reduce your estate taxes.
• A retained life estate, which allows you to retain the right to live on or receive income from the property, potentially reduce estate taxes, and receive a tax deduction in the year the gift is made.
• A charitable remainder trust, which allows you to create an income stream for yourself or a designated beneficiary, minimize capital gains taxes, and reduce state taxes.

“When you are making a sizable contribution like a gift of land, you want to make sure it is to an entity that is going to be around for a long time and is responsible. Iowa State University withstands the test of time.”

— Lloyd Bettis, ’70 agricultural journalism

Gifts of grain

Gifting grain can provide a larger tax benefit than selling it and making a gift from the proceeds. Contributing grain may allow you to avoid the sale of the commodity as income while still deducting production costs, thus reducing taxable income and supporting your area of choice at Iowa State University.

Gifts of machinery

While some farmers choose to reap immediate tax benefits by depreciating machinery, recaptured depreciation can often create unanticipated tax issues when you no longer need the equipment. You may receive several benefits from gifting machinery through:

• Outright giving, which allows Iowa State to sell the item and use the proceeds immediately to help advance the university.
• A charitable remainder trust, which allows you to receive income from the sale of the machinery and spread any depreciation tax over a period of years to avoid a lump tax payment.

Gift of business assets

Some farmers have organized their operations as corporations. There may be opportunities to gift shares in the corporation or assets from the corporation. These gifts could carry significant tax and financial benefits, as well as help you to create a lasting legacy at Iowa State.