Auction Tax Guidance
Guidance on Taxes
The auction toolkit contains
a comprehensive review of the tax implications of a charity auction.
It covers, non-profit status, tax exemption for donors and buyers,
written acknowledgement requirements, quid pro quo donations, written
disclosure requirements, rules for contributors, special rules
for churches and religious organizations, and gaming laws.
This chapter alone
is worth the cost of the toolkit given the amount of the time
you will save researching the tax laws that apply to donor, the
purchaser, and the organization holding the event. The excerpt
below is just one small sample of an area of the law you need
to be aware. Click
Now to Order "Running a Profitable and Fun Charity Auction:
The Complete Toolkit"
Written Disclosure Requirement
This part of the law applies to your guests when they purchase
items at the auction. According to the IRS;
“A donor may only take a
contribution deduction to the extent that his/her contribution
exceeds the fair market value of the goods or services the donor
receives in return for the contribution; therefore, donors need
to know the value of the goods or services. An organization must
provide a written disclosure statement to a donor who makes a
payment exceeding $75 partly as a contribution and partly for
goods and services provided by the organization. A contribution
made by a donor in exchange for goods or services is known as
a quid pro quo contribution.”
IRS Publication 1771
Although many of your guests might
want to believe that the amount they paid for an item at the
auction is a pure donation for tax purposes. However, if the
item they purchased had value (most likely it did), then it is
not fully deductible. It is considered a “quid pro quo contribution” because
they received something in value. Therefore, you are required,
if the payment exceeds $75, to provide them with written disclosure
(a receipt).
Guidance on Taxes
The auction toolkit contains a comprehensive review of the tax implications of a charity auction. It covers, non-profit status, tax exemption for donors and buyers, written acknowledgement requirements, quid pro quo donations, written disclosure requirements, rules for contributors, special rules for churches and religious organizations, and gaming laws.
This chapter alone is worth the cost of the toolkit given the amount of the time you will save researching the tax laws that apply to donor, the purchaser, and the organization holding the event. The excerpt below is just one small sample of an area of the law you need to be aware. Click Now to Order "Running a Profitable and Fun Charity Auction: The Complete Toolkit"
Written Disclosure Requirement
This part of the law applies to your guests when they purchase items at the auction. According to the IRS;
“A donor may only take a contribution deduction to the extent that his/her contribution exceeds the fair market value of the goods or services the donor receives in return for the contribution; therefore, donors need to know the value of the goods or services. An organization must provide a written disclosure statement to a donor who makes a payment exceeding $75 partly as a contribution and partly for goods and services provided by the organization. A contribution made by a donor in exchange for goods or services is known as a quid pro quo contribution.”
IRS Publication 1771
Although many of your guests might want to believe that the amount they paid for an item at the auction is a pure donation for tax purposes. However, if the item they purchased had value (most likely it did), then it is not fully deductible. It is considered a “quid pro quo contribution” because they received something in value. Therefore, you are required, if the payment exceeds $75, to provide them with written disclosure (a receipt).
