Colorado Crop and Livestock Contribution Credit
Many Colorado companies are looking for ways to be give back to their community, while at the same time reduce their tax liability. This can come in the form of financial contributions, vehicle donations and even food items when available. In fact, there are many agriculture companies in Colorado that make regular donations of crops, livestock and other items to support their selected charities. However, few are aware of the Crop and Livestock Contribution Credit available to qualifying Colorado companies. This program is designed to reward companies for making contributions by offering a generous tax credit against state income taxes. To help clients, prospects and others understand the credit and its benefits, Hanson & Co., has provided a summary of key program details below.
Crop and Livestock Contribution Credit Overview
A tax credit equal to 25% of the contribution – valued at wholesale market or the most recent sales price – is available to taxpayers that donate crops or livestock to a charitable organization for use in Colorado. The credit is only available to C-Corporations and not to individuals, S corporations, trusts, estates, partnerships or other pass-through entities. The amount of tax credit may not exceed $1,000 per year nor the total tax liability after other credits are applied. However, any remaining credit can be carried forward for a period of up to five years.
To qualify for the credit, the following conditions must be met:
- The crop must be harvested or livestock slaughtered by or on behalf of the charitable organization
- The crop or livestock use must be related to the organization’s purpose or function that constitutes its tax-exempt status
- The donation must be used in the state of Colorado
- The crop or livestock cannot be transferred by the charitable organization for cash, property, services or other compensation
- The taxpayer must receive a written statement from the charitable organization that expresses their compliance with these conditions for use and disposition of the crop or livestock
Some terms in the tax code for this credit can be misconstrued, so the state has provided some key definitions:
- Crop – an agricultural crop including but not limited to grains, fruits and vegetables and usable as food for human beings.
- Livestock – cattle, swine, poultry, or other animals raised for-profit and usable as food for human beings.
- Most recent sales price – an amount equal to the price the taxpayer would have received for the contribution if the crop or livestock had been sold on the date of the most recent sale of such crop or livestock.
- Wholesale market price – the average wholesale market price for the contributed crop or livestock in the nearest regional market during the month in which the contribution is made (without consideration of grade or quality and as if the quantity contributed were marketable).
The state of Colorado offers many tax incentive programs designed to encourage and reward charitable giving. When combined with other state and federal programs, companies can receive substantial benefits. If you have questions about this program and whether you qualify or for corporate tax planning assistance, Hanson & Co can help. For additional information please call us at (303) 388-1010, or click here to contact us. We look forward to speaking with you soon.