FundSvcs Community

All,

Our arts center has a membership program with associated benefits. I'm reviewing next year's proposed benefits, and one is 2 guaranteed spots at the season preview event. The public can attend the season preview event for free, but space is limited. Donors get an invitation for 2 people, they RSVP, and then it is open to the public. Does the "guaranteedness" of the spot necessitate a FMV? If so, what's the best way to calculate that since it's a free event? Just the normal best estimate at what a willing buyer would pay willing seller, or the is the minimum membership level required to get this benefit?

Thanks in advance.

Sean


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Sean Shappell
Asst. Vice President, Information Services
Lehigh University
ses211@lehigh.edu
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John,

Thanks so much. That was my gut feeling as well, but my brain hasn't left Monday morning yet. So, I wanted a second opinion.

Sean

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Sean Shappell
Asst. Vice President, Information Services
Lehigh University
ses211@lehigh.edu
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Original Message:
Sent: 05-24-2022 12:21 PM
From: John Taylor
Subject: FMV for guaranteed spot at space-limited public event

Yes, Sean, I do think you must determine a FMV.  This goes way back about 40 years when the IRS first came up with the 80/20 rule for athletics.

Back then, all priority or preferred seating scenarios required calculating a FMV for those rights or benefits.  The NCAA complained saying that was too difficult.  So Treasury came up with the 80/20 rule which, as we know, became 0% deductible in 2018.

However, all along other seating programs including arts and cultural events were then and now subject to these rules.  That does not make it any easier to calculate the value.  All the IRS states is you must make a "good faith estimate" of that value.

You offered two reasonable approaches.  But I'd let Counsel weigh in.

John

John H. Taylor

Principal

John H. Taylor Consulting, LLC

2604 Sevier St.

Durham, NC   27705

johntaylorconsulting@gmail.com

919.816.5903 (cell/text)

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