How are auction items deductibility calculated?
Deductibility by the donor — a donor may deduct the fair market value of a charitable contribution of a tangible item donated to a 501(c)3 nonprofit to be sold at auction. Deductibility by the successful bidder — a successful bidder for an item sold at a charity auction MAY NOT deduct the price paid for the item. They received the item in exchange for the “gift.” If, however, they can provide written documentation that they paid more than the fair market value for the item, they may be able to deduct the difference between the price paid and the item’s fair market value. For more information, see the examples on pages 3 and 7 of IRS Publication 526.
