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  • 1.  Auction Item Purchase - Lifetime Membership Value

    Posted 03-09-2023 02:05 PM

    Hi Everyone,

    Our parents' association organized and ran an auction event last year - managed independently from our school and proceeds were pooled and donated to us.  One of our alumni purchased a lifetime membership to an exclusive beach club.  At the time of purchase, this item was presented with an estimated value of $20,000 and the alum purchased at $28,000.  This beach club currently has an initiation fee of $22,500 and also has monthly dues of $415, but for this particular auction item, monthly dues are never charged for the purchaser.  The alum has asked the school for a donation receipt for the difference between the original estimated value and the purchase price.  Do the monthly dues factor into the value and can we issue a donation receipt on behalf of our parents' association?

    Many thanks in advance for any advice/guidance/information!



    ------------------------------
    Tony Mercadal
    Director of Advancement Services
    Ransom Everglades School
    tmercadal@ransomeverglades.org
    ------------------------------


  • 2.  RE: Auction Item Purchase - Lifetime Membership Value

    Posted 03-12-2023 01:03 PM
    Tony, I am circling back to this question as I do not think you received any replies.

    In keeping with IRS rules, you should only describe what was purchased (a lifetime membership in a beach club) and that the winning bid was $28,000. You should state on the receipt that you listed the membership as worth $20,000 but that it has a $22,500 FMV. The buyer will need to prove the value of the gift. 

    The challenge in this scenario is that the auction did not properly disclose the FMV of the membership. It's not the $20,000 you listed, but $22,500. The monthly dues are not a factor, as they have been waived. Although that sounds highly irregular. Do you have that in writing from the club?

    And would you happen to have an explanation from the club regarding how the minimum initiation fee is $2,500 more than the stated value?

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987




    Original Message


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