How Should Items Donated for a Silent Auction Be Treated for Tax Purposes?

Q: 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 as noncash contributions under federal tax law. Donors are responsible for determining the value of their noncash gifts and calculating the appropriate amount to deduct as a charitable contribution. However, it’s important to note that certain donations, such as services or the use of property (e.g., a vacation cottage), are not tax-deductible.

For items donated to a silent auction, donors who contribute noncash items valued at more than $500 must generally file IRS Form 8283 with their tax returns. Depending on the type of item and the claimed deduction amount, donors may also need a church official’s signature on the Form 8283 to confirm receipt of the donation.

If the church sells, exchanges, or disposes of a donated item within three years of the contribution date and previously signed a Form 8283, the church must file IRS Form 8282 within 125 days. A copy of Form 8282 should also be provided to the donor.

The church should issue a contribution acknowledgment that includes:

If no goods or services were provided, the acknowledgment should clearly state that. If goods or services were provided, the acknowledgment must include their estimated value and a statement noting that the donor may only deduct the excess of their gift amount over the value of the goods or services received.

Donors should be aware that contributions of services (e.g., professional skills or labor) and gifts of the right to use property (e.g., a vacation home for a week) are not tax-deductible. While the church can acknowledge such gifts, the acknowledgment should state that these types of donations are generally not deductible, and donors should consult a tax advisor for guidance.

For donations of vehicles such as cars, boats, or airplanes, special IRS rules apply. Donors should refer to IRS Publication 4303 for detailed guidance on vehicle contributions.

For more information about charitable contributions and IRS requirements, refer to Chapter 8 of the Church & Clergy Tax Guide. This resource provides comprehensive details on acknowledgment requirements, filing forms, and other aspects of charitable giving.

Physical items donated to a silent auction are generally tax-deductible, but donors must determine their value. Services or the use of property are not deductible.

Donors must file IRS Form 8283 for noncash contributions over $500. If the church sells the item within three years, it must file IRS Form 8282.

The acknowledgment must include the date of the gift, a description of the donated property, and whether goods or services were provided in exchange for the gift.

Vehicle donations are subject to special rules outlined in IRS Publication 4303. Donors must follow specific IRS guidelines for these contributions.