When it comes to the items you are describing and the IRS, the IRS deems the worth of the items purchased to be equal to the purchase prices.
The IRS expert at the Dallas show last year gave this example. He had a $5 dollar die cast car signed by Dale Earnhardt. Though the cost of the car was $5, the value of the car was much more than that. There would be no donation as the highest bidder was setting the value of the car.
The post about the IRS is really interesting. I wasn't involved in any follow-up in the past, but it never occurred to me that I would have to document for people that they paid over the value. The business person for our school is on vacation, I need to talk to her about this next week. Most people pay under the value of the donated things like massages and haircuts and musuem tickets, but the things that are decorated by our kids go way over any retail value. A $50 bench decorated with handprints from the toddler class could go for a couple hundred dollars. I don't remember anyone talking last year about sending letters to the buyers but, as I said, I wasn't involved in that part of it. We also sell "name the driveway" for next school year; the street sign costs $70, I think, but people pay way more. Very interesting, thanks.
Following up on my last post on this subject--JHB made it easy for me to track this down when she posted an IRS brochure in another post. The deal on giving documentation out on silent auction purchases is this: "A charitable organization must make a written disclosure to a donor who makes a payment in excess of $75 partly as a contribution and partly for goods and services provided by the organization." So, if you have someone who bids $81 on an $80 item, you need to provide this written disclosure, even though they could only deduct $1.
We run a silent auction with our spring carnival (in 1 week) we have a bid form that is taped to the table in front of the item. On that form we put the retail value and a minimum bid on the first line. This way they know the worth of what they are bidding on and we secure it so they can't get something that is 500 bucks (yea we actually have 1 item worth that) for 10 bucks. This way we make our money and people still get good bargins.
