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Determining FMV on silent auction gifts

  • 1.  Determining FMV on silent auction gifts

    Posted 02-01-2023 01:45 PM
    My question is regarding Form 8282 requirements related to gifts to be sold at silent auctions.

    If a donor lists a FMV of >$500 for their item to be sold at a silent auction, do we need to submit an 8282 form for each such item (assuming it's within 3 years of the gift)?  

    For this purpose, can we use the FMV as established by the donor for determining our 8282 filing needs, or is there further work required to establish a FMV if nothing else was submitted by the donor of the property?

    Currently, unless a donor submits an appraisal or a recent receipt with their silent auction item, we record all silent auction items in our software as $1 GIK.  For the purpose of establishing a starting bidding price, we ask donors of items to list a FMV of their silent auction item.

    Thanks!

    --
     Gwen Donev

    Director of Advancement Services

    Gustavus Adolphus College

    800 West College Avenue

    Saint Peter, Minnesota 56082

     

    Email:  gwendonev@gustavus.edu

    Office:  507.933.6515



  • 2.  RE: Determining FMV on silent auction gifts

    Posted 02-01-2023 02:22 PM
    8282s are only required for donations valued at $5,000 or more and are "disposed" of withing three years.

    Indeed, donors who donate property worth $500-$4,999 must file an 8283. But those 8283s do not come through us.

    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






  • 3.  RE: Determining FMV on silent auction gifts

    Posted 02-01-2023 03:15 PM
    The duty to file the 8282 is triggered by the donor claiming a value of $5k+ on the 8283.

    Note that your org still needs to determine an FMV for the auction. The donor's claim of value is a relevant input, but especially for unusual items you should have some other inputs into setting the FMV. 


    Isaac Shalev
    Data Strategy Expert
    (917) 859-0151
    isaac@sage70.com

    Autocorrect was used in composting this email, please excuse any typos





  • 4.  RE: Determining FMV on silent auction gifts

    Posted 02-01-2023 04:46 PM
    Hm, so if we don't receive an 8283 form from the donor to sign, we don't have to submit an 8282?

    My controller said something about a requirement that we would need to submit the 8282 within 120?125? days of selling the item.  What if we wouldn't receive the 8283 until well after we'd sold the item?






  • 5.  RE: Determining FMV on silent auction gifts

    Posted 02-01-2023 05:07 PM
    IRS language on this requirement is not precise. Many suppose that no 8282 is required if no 8283 was provided. However, I always issue the 8282 if the item is sold or disposed of within three years. Sadly, some donors have falsified 8283's (we have found them out). In other words, just because you did not see an 8283 does not mean the donor didn't turn one in.

    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







  • 6.  RE: Determining FMV on silent auction gifts

    Posted 02-01-2023 05:16 PM

    Yeah, it's hard to know, and even harder if an organization's practices don't allow confidence that someone somewhere in the organization might not have signed an 8283.

     

    On the other hand, there are any number of reasons why a donor might not have claimed a deduction and therefore not completed an 8283, and here comes the organization filing an 8282 for the sale of property that the donor didn't deduct, which can't help but complicate matters for the generous donor who made the gift to the organization.

     

    I guess I would work toward reasonable confidence that if an 8283 was signed by the organization it would be logged centrally, and then only complete the 8282 when the organization signed the 8283.

     

    My US$0.02 worth; the usual disclaimers apply.

     

    Good luck!

     

    Alan

     

    Alan S. Hejnal    (he/him/his)

    Data Quality Manager

     

     






  • 7.  RE: Determining FMV on silent auction gifts

    Posted 02-01-2023 06:35 PM
    The rule is that you have to file the 8282 within 125 days of the date of sale/disposition of the property. But if you don't file within 125 days because you had no reason to believe that you had to, -- e.g., the donor didn't tell you that they were claiming a valuation of $5k+ by asking you to fill out the donee part of the 8283, you will have 60 days from whenever you do get notice. The instructions on the 8282 explicitly state that not getting the 8283 from the donor in a timely manner would be a case under which you have 60 days from actual receipt of the 8283.

    Where there is a kind of gray area is when you reasonably know that the donor intends to claim a deduction, and you know the value is more than $5k, but you haven't received the 8283. Normally, the law's take is that if you know, you know, and your obligation tolls once you know. The instructions on the form seem to support that interpretation. They say that if you didn't get Section B of the 8283, you should file the form with incomplete information. In other words, there must be a case where you didn't get 8283, but still knew the donor was taking a deduction of $5k+, and the IRS is still leveling an obligation to file the 8282. 


    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:







  • 8.  RE: Determining FMV on silent auction gifts

    Posted 02-02-2023 08:34 AM
    Oh, wow, thank you so much everyone for this great insight and translation of the IRS rules!  Once again, I'm so grateful to have this listserv and you all as invaluable resources in doing this work!

    Have a great day,
    Gwen






  • 9.  RE: Determining FMV on silent auction gifts

    Posted 02-02-2023 08:55 AM

    The "gray area" is interesting.

     

    I wonder whether issuing a standard, vanilla descriptive gift-in-kind receipt, indicating that a charitable contribution was made, is enough to infer that the recipient "reasonably knows that the donor intends to claim a deduction"?

     

    My US$0.02 worth; the usual disclaimers apply.

     

    Good luck!

     

    Alan

     

    Alan S. Hejnal    (he/him/his)

    Data Quality Manager

     

     






  • 10.  RE: Determining FMV on silent auction gifts

    Posted 02-02-2023 09:39 AM
    Alan, if the item description leads to the conclusion that the item's value was $5k+, eg "4 karat diamond engagement ring", I think it could be enough to create a duty to file an 8282. 


    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:







  • 11.  RE: Determining FMV on silent auction gifts

    Posted 02-02-2023 10:12 AM
    But what if the donor doesn't claim this as a tax deduction?  Even if we have reason to know that the item has a value over $5K, if the donor doesn't submit the item on their taxes, to Alan's point, does the IRS care that we sold it within 3 years of the gift?








  • 12.  RE: Determining FMV on silent auction gifts

    Posted 02-02-2023 10:15 AM
    If you know for a fact that the donor didn't file an 8283 then an 8282 isn't really necessary. However, how to prove no 8283 was submitted without your knowledge is a bit difficult. Filing an 8282 when one isn't needed isn't a problem. Not filing one can be.

    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







  • 13.  RE: Determining FMV on silent auction gifts

    Posted 02-02-2023 11:09 AM

    Well, not a problem for us, at any rate.

     

    Whether it might be a problem for our donor, who might then have to deal with the IRS following up on an 8282 for a deduction that wasn't claimed, is less clear to me.

     

    My US$0.02 worth; the usual disclaimers apply.

     

    Good luck!

     

    Alan

     

    Alan S. Hejnal    (he/him/his)

    Data Quality Manager

     

     






  • 14.  RE: Determining FMV on silent auction gifts

    Posted 02-02-2023 02:36 PM
    I can't imagine the IRS is going to chase down the donor to ask why the donor didn't take a deduction. The donor is not required to take a deduction if they don't want to, and they're only required to fill out the 8283 if they claim a deduction. 

    If the donor doesn't fill out the 8283 but does take the deduction, and you fail to fill out the 8282, that could be troublesome. The IRS, assuming they catch it, would disallow the deduction, and then might want to know why you didn't file an 8282. You could say you didn't know the donor as going to take a deduction, but that might not hold up as a defense. 


    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:







  • 15.  RE: Determining FMV on silent auction gifts

    Posted 02-02-2023 03:03 PM
    Can the donor take the deduction if they don't submit the 8283?






  • 16.  RE: Determining FMV on silent auction gifts

    Posted 02-02-2023 03:14 PM
    Not unless they falsify their tax return and claim a cash gift.

    We must issue receipts per IRS publication 1771, execute 8283s when presented to us, and file an 8282 as needed.  How a donor files their return is between them and the IRS.

    John

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard





  • 17.  RE: Determining FMV on silent auction gifts

    Posted 02-02-2023 03:43 PM
    The donor can try to take the deduction without the 8283, in the sense that they can enter the amount on their 1040 Schedule A, where itemized deductions are listed, but then not file an 8283. But the deduction should be disallowed in that case - and doing that on purpose is likely fraudulent. I just don't know how good the IRS is at catching this.


    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now: