Donation of apples - valuation

[taxgirl]

T/P has a small apple farm which typically operates at a small loss and an excavating business which operates at a profit. He donates his leftover apples to local food pantries.

The worksheet in pub 526 basically allows 50% of the difference between fmv and basis. If the basis exceeds fmv, you can use fmv. Not sure how I would calculate basis. The total charitable contribution at fmv would be $2370. I'm thinking about using a percentage of the total to allow for the worksheet calculations?? Would like to assume basis is more than fmv and just go with that...

Anybody else have something similar...

[ATSMAN]

T/P has a small apple farm which typically operates at a small loss and an excavating business which operates at a profit. He donates his leftover apples to local food pantries.

The worksheet in pub 526 basically allows 50% of the difference between fmv and basis. If the basis exceeds fmv, you can use fmv. Not sure how I would calculate basis. The total charitable contribution at fmv would be $2370. I'm thinking about using a percentage of the total to allow for the worksheet calculations?? Would like to assume basis is more than fmv and just go with that...

Anybody else have something similar...

I had a similar issue with a Farm return where the produce (leftover) was donated to a shelter and a food pantry. After much research I came to the conclusion that FMV was the lowest price those items could be sold in the open market. To calculate basis was a pain in the neck for produce that is leftover. I would think basis would be more than FMV because the farm was at a loss!

[taxgirl]

After digging further I found the reinstated/permanent PATH Act for enhanced deductions of food. Am I reading it correctly that I could use 25% of fmv for my basis and would then compare, for the deduction, the lesser of twice the basis or basis plus 1/2 fmv as my donated value?

[Lion]

Just a guess based on farm animals, but his basis if he purchased the apples is well documented. His basis if he grew the apples is $0 if he already deducted all his expenses of growing, such as seeds, fertilizer, irrigation, climate control, labor, etc.

[Gene V]

Donating farm crops to charity

The way you save on your taxes is the FMV of the apples where not sold, so you do not report them on Schedule F income, however, the expense of raising the apple are deductible on Schedule F. You do not deduct anything on Schedule A. I think what you are reading in the Publication does not pertain to Farmers donating crops to charity.

This will probably explain what I'm trying to say.

http://farmdocdaily.illinois.edu/2014/08/donating-crops-can-mean-substantial-2014-tax-savings.html

[Roland Slugg]

I have no idea where you are coming up with the information in your posts. The usual rule for contributions of inventory is that the deduction is limited to basis. There is a special rule for contributions of food inventory, however, provided that the donee organization(s) meet specific requirements. Those requirements are spelled out in Pub 526 (and elsewhere). If those requirements are met, the deduction is the food's FMV on the date given to the donee.

[spanel]

I have no idea where you are coming up with the information in your posts. The usual rule for contributions of inventory is that the deduction is limited to basis. There is a special rule for contributions of food inventory, however, provided that the donee organization(s) meet specific requirements. Those requirements are spelled out in Pub 526 (and elsewhere). If those requirements are met, the deduction is the food's FMV on the date given to the donee.

If he didnt pay for the apples and grew them.. why are we giving him a second deduction? He is already deducting all the expenses for growing the apples correct? If he wants to deduct some value for charity.. he should sell the apples and them give the money to charity. I say if he just gives away apples that he grew, already deducted any expense related to that, no second deduction.

Chris