Q&A: How should items donated for a silent auction be treated for tax purposes?
Q&A: How should items donated for a silent auction be treated for tax purposes?

My church is planning a silent auction to raise money for a missions trip. What should we say to potential donors to help them understand any tax implications for their donations—whether it involves a donated item, a service, or, say, the use of a vacation cottage for a week?

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).

Donors who contribute noncash items valued at more than $500 must generally file a Form 8283 with their tax return. Depending upon the type of item contributed and the amount claimed as a deduction by the donor, the donor may be required to obtain a church official's signature on the Form 8283 confirming receipt of the donation. If, within three years of the date of the contribution, the church sells, exchanges, or otherwise disposes of a donated item for which it signed a Form 8283, the church is required to file a Form 8282 with the IRS within 125 days. A copy of the Form 8282 filed should be provided to the donor.

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