Expert: Harvey Mechanic - 7/1/2009

Question
We recently hosted a fundraising event that included purchasing a ticket, a live and silent auction and an on-site contribution.  

My questions is in regards to the acknowledgement.  The cost for the ticket was $125.  The tax-deductible amount is $75.  What is the appropriate language to use in order to describe this to the donor?  

Also, for those donors who may have bought a ticket, auction item and made a contribution, I would like to only send one letter.  Can I create an itemized statement to include with the letter for them?  And again, what is the correct language in the case where the auction item is valued higher then the price they paid?

Thank you.

Answer
See the IRS Publication "Charitable Donations --- Substantiation
and Disclosure Requirements"
www.irs.gov/pub/irs-pdf/p1771.pdf

Example on pdf page 11,  "Thank you for your cash contribution of
$350 that (organization's name) received on May 6, 2005. In
exchange for your contribution, we gave you a cook-
book with an estimated fair market value of $60."

Yes, you can put everything in one letter. As to the auction, see IRS Publication 526 "Charitable Donations"
www.irs.gov/pub/irs-pdf/p526.pdf
on page 3 "Example 2. At a fund-raising auction con-
ducted by a charity, you pay $600 for a week’s
stay at a beach house. The amount you pay is
no more than the fair rental value. You have not
made a deductible charitable contribution."

That evidences that the value of the item is relevant no matter whether it is sold or purchased by auction.

Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com