Charitable Contributions

Did you make a cash contribution to your favorite charity? Have you recently spent a weekend cleaning stuff out of your garage or basement that you then donated to a local charity?
Charitable contributions can be tax deductible, but you must have the proper records to support your deduction. Due to the Pension Protection Act of 2006 the rules on record keeping for charitable contributions became a little more strict beginning in January 2007.

To deduct a charitable cash donation, regardless of the amount, you must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Acceptable bank records would include canceled checks or bank or credit union statements containing the name of the charity, the date and the amount of the contribution.

Under the previous rules, records such as personal bank registers, diaries or notes made around the time of the donation could often be used as evidence of cash donations. Personal records like this are no longer sufficient.

Here are some additional tips to help you deduct your charitable contributions on your 2008 federal tax return.

Charitable contributions are deductible only if you itemize deductions using Form 1040. (If you are a partnership or a sub-chapter S corporation the deductions will appear on your K-1 with instructions for their inclusion on Schedule A of your Form 1040. Only if you are a regular corporation will you reflect a charitable contribution on page one of your federal tax return.)
Contributions must be made to a qualified organization.

Used clothing and household items such as furniture, linens and appliances must be in good used condition.

Vehicle donations are subject to special rules.

To deduct charitable contributions of items valued at $250 or more you must have a written acknowledgment from the qualified organization.

To deduct charitable contributions of items valued at $500 or more you must complete a Form 8283, Non-cash Charitable Contributions, and attached the form to your return.

So all of this is fine and good; but, how does it apply to alpacas? The rules as found in Publication 526, page 11, state that if the asset contributed is ordinary income or short term gain property you are limited to its fair market value less the amount that would be ordinary income or short term capital gain if you sold the property for its fair market value. Generally this means you are limited to your basis in the asset as your deduction. Example-you have a male you want to donate to 4-H whose value is $1,000. He was born on your farm. The deduction computation would be the FMV of $1,000 less the ordinary income you would generate if you sold him of $1,000 resulting in a deduction of zero. However, if your property donated is considered capital gain property your deduction can be the fair market value which would result in a $1,000 deduction in the above example.

More information is available on the IRS Web site at IRS.gov. A good resource is IRS Publication 526, Charitable Contributions, found on the web site or by calling 800-TAX-FORM (800-829-3676).

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by Internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is http://www.irs.gov/.

Above article courtesy of the Internal Revenue Service--with a few clarifications interspersed.

Cria Update--2 more

On July 14th Cocopuff presented us with a very handsome MFI Peruvian Providence male cria by the name of MRN Moche of Providence. He is a third generation Studmaster progeny with Providence as sire, MFI Peruvian Gallant Deed as the sire of his dam and El Toro 605 IMPG98 the sire of his granddam, Faik's Elana. He has the whole package as would be expected from his lineage. The rest of the names in his lineage would be the who's who of alpacas--Ppperuvian Royal Fawn, Ppperuvian Augusto, My Peruvian Rolex, 6Peruvian Accoyo Titan and last but not least Ppperuvian Mr. President. Moche is proudly owned by Alpacas of Marin.

The most recent addition appeared yesterday afternoon, July 24th.

Autumn Sunshine delivered the third of Tucker Creek's Wilson's offspring. As you may recall, Wilson died on February 2nd so each of his offspring are very special to us. Following the candy theme for this year his name is Tucker Creek's Big Hunk. With him comes a mixture of Peruvian Hemingway out of grandsire El Bello, Ppperuvian Augusto out of MFI Peruvian Glacial Storm and a bit of Accoyo on Autumn's side of the family tree--El Bello's dam is full Accoyo, PPPeruvian Julia.

Eighteen more little critters are expected this year. With the eight cria who have arrived so far the boys are winning--two girls against six boys--but Candy and Cherry Garcia are doing a good job of keeping those boys in line.

2008 Cooperator of the Year

Who would have thought I would receive an award for being cooperative--certainly not my parents.

You can click on the image to the right to read the article. Working with the Clatsop Soil and Water Conservation District we were able to build a dry manure facility. It has made that section of our property much more attractive while meeting the environmental constraints of being surrounded by water with wetlands on two sides and the creek on the third side of our pastures. Over the years quite a few local gardeners have come by for a load to augment their soil with wonderful results--with this upgraded facility we should be able to have a much more userfriendly end product.

Much to Sun Tzu's dismay they didn't select the photo featuring him--they selected the one critter on the farm who could care less about being in the limelight--my opinionated mustang mare, Tess.

Boundary Waters Alpacas is headline news

What a fun surprise. Along with the bills and the advertising we received a wonderful bit of news in the mail a few days ago. We opened the envelope to find pictures of our beautiful Kikisan, Party Girl, Hersey Kiss and their respective offspring along with the headline "Ely Farm Home to Gentle Alpacas" on the front page of one of the sections of the Sunday edition of the Mesabi Daily News. It was just so fun to see our critters in the paper--and Kikisan was born on our farm so that was doubly fun.

It was a lovely article and helps to promote the lifestyle and benefits of alpaca ownership--not to mention the marketing opportunities this type of publicity can create. Jan is a busy real estate executive (contrary to what the article says--she may have sold the business but she still puts in a full week's work at the real estate office) so if she can find the time to take care of these wonderful critters most others could do the same.

Congratulations to Boundary Water Alpacas for reflecting what is best about this industry.

Husband and Wife "Qualified Joint Venture"

Leave it to the feds to name a husband and wife unincorporated business as a "qualified joint venture". What that really means is that if you and your spouse are operating an unincorporated business jointly then you don't have to be treated as a partnership any longer. Prior to the Small Business and Work Opportunity Tax Act of 2007 a husband and wife who were operating a business together were technically a partnership and were required to file a partnership return. The change made in the recent tax law was designed to make filing our taxes easier.

LLC's are not a federal designation. They are a state recognized entity. A single member LLC is viewed by the IRS as a "disregarded entity" and the income or loss is reported as part of the individual's Form 1040. We made an assumption that the change made in the 2007 law would also apply to activities operated by spouses through a Limited Liability Company--that is not the case--this law does not apply to LLC's unless they are located in a community property state. If so, the rules are addressed at Rev. Proc. 2002-69.

From a practical point of view you only need to file your business activity in your personal Form 1040 as either a Schedule C or Schedule F activity and the election is made. More details on the election can be found by clicking on the title above.

Please feel free to let us know if you have questions on this or any other tax topic. Also let us know if there is a topic you would like addressed in a future posting to this blog.

Two more cria this week

The cria additions for this week were both from client females--Izett for Jim Supple out of Cool, CA and Brandy for Stoneberg Alpacas, LLC out of Hillsboro, OR. For each of these females it was their first delivery and they were text book--not a glitch for either and both are excellent moms.

Izett's little male is out of Sun Tzu, has lovely crimpy fiber and he looks like he will be beige. So far we are calling him Jim as the owner has not yet given us a name. As our friends at Snowy River Alpacas can share with you--those "temporary" names can stick with them as we all still call Shadow by the name of Parker as they took too long to come up with an official name. His blood draw was done as Parker, his microchip, for just about all those early cria activities he was called Parker. If we aren't careful this little guy Jim could be in the show ring still being called Jim.

Brandy was bred to Pacific Crest Accoyo Paul Revere and her male cria is medium fawn. This photo taken by Doc Hunter of his granddaughter, Belle, holding Firecracker was just too cute to pass posting. Belle was helping while her grandfather drew Firecracker's blood for his IgG and DNA tests as well as while he was implanting his microchip. What a great little helper. Belle is planning to be a veterinarian like her grandfather--she is already in training.

Wilson Cria Number Two is a Girl

On June 30th at 12:32 pm Jasmine layed down in front of us and presented us with a beautiful baby girl--as you can see from the photo her cria is just a much smaller version of herself. Carrie Hull of Coarse Broads came up with the perfect name for her while she was sorting Jasmine's fiber--Carrie thought her fiber reminded her of Cherry Garcia. Now considering that Cherry Garcia is one of my favorite things--the name was perfect. Cherry was up and nursing within 35 minutes and trying out her running legs within an hour.

Each of Wilson's cria demonstrate a little bit of him--his stance, his interest in everything, his overall presence. We still miss him--but it is nice to have a part of him in our pastures. Two more of his cria are scheduled--one next month out of Autumn Sunshine and one in October out of Bo Jangles.