Not All Noncash Gifts for Silent Auctions Are Tax Deductible
Donations of vacation property do not result in a charitable write-off.
Not All Noncash Gifts for Silent Auctions Are Tax Deductible

The News

From the June 28, 2019, issue of Kiplinger Tax Letter:

Think twice before donating to charity the right to use your vacation home. Charities such as schools and churches often use such places as prizes for dinners, galas or auctions that they sponsor to raise funds for their activities. You don’t get a charitable write-off because you gave only a partial interest in the property. Nor is there any deduction for the winning bidder, unless that person paid more for his or her winning bid than what the vacation home prize is worth. And be wary of this tax trap if you also rent out the vacation property: The time used by the winning bidder counts as personal use by you for purposes of the rule that prohibits the deduction of rental realty losses when the owner’s personal use tops the greater of 14 days or 10% of days rented.

The Church Law & Tax Take

Churches often organize fundraising dinners and silent auctions where members offer the use of their vacation properties as items for auction bids or prizes. Kiplinger’s caution is an important reminder for leaders who solicit these types of donations. They need to tell donors they cannot write-off these noncash gifts as income tax deductions.

CPA Kaylyn Varnum with Batts, Morrison, Wales & Lee, a national CPA firm serving nonprofits and churches, provides further details in a Church Law & Tax Q&A (italic added for emphasis):

Items donated to a silent auction are treated the same as other noncash contributions to the church. Under current federal tax law, donors are responsible for determining the value of their noncash gifts and the proper amounts to deduct as a charitable contribution. Unfortunately, no charitable contribution deduction is allowed for donated services or for a gift of the right to use property (such as the use of a vacation cottage).

Varnum’s answer provides further explanation regarding the handling of noncash donations given by donors.

For more help with charitable contributions and donations, check out the following resources:

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations."

Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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