Thank you so much for your podcast. I’m a big fan! Plus it helps the time go faster on the stair master.
I’d love your take on a strategy that’s been gaining traction with some high-income clients, particularly around charitable planning and tax leverage.
The structure works like this:
- A client invests (for example) $60,000 to purchase agricultural seeds at a discounted price.
- The seeds are held for more than one year to qualify for long-term capital gain property treatment.
- After the holding period, the seeds are donated to a qualified charity.
- At the time of donation, the seeds are appraised by a qualified third-party appraiser, and the charitable deduction is based on the fair market value—not the original purchase price.
- Currently, valuations are coming in at roughly 6× the initial investment, meaning a $60,000 investment could generate a ~$360,000 charitable deduction.
My questions for you:
- From a tax strategy standpoint, do you view this as a legitimate and defensible charitable planning technique?
- How would you evaluate the audit risk here, particularly around valuation and “substance over form” concerns?
- Are there specific red flags or IRS scrutiny areas (e.g., conservation easement parallels, syndicated transactions, valuation inflation) that practitioners should be especially cautious about?
Would really appreciate your perspective on whether this is a viable strategy or one that carries more risk than reward.