Q&A: Are Tax Deductions Allowed for Silent Auctions?

My church is holding a silent auction of items donated by artists and craftsmen in the congregation. Can donors receive tax deductions for their noncash contributions? Can winning bidders receive deductions for items purchased? We hope winning bids will be much higher than the normal selling price.

Yes, the donor of an item he or she created is entitled to a deduction, but in many cases, the amount of the deduction won't be fair market value. Artists are generally limited to cost basis for contributions of property they create and donate to charity. And unless the recipient 501(c)(3) church/charity uses the property in its exempt activities, donors in general are limited to cost basis deductions (not fair market value) for contributions of appreciated tangible personal property (items other than securities, which are intangible, and land and buildings, which are real property). Selling ...