Newman auction/Charitable contribution

EastonCollection

Lets say I bought a coin in the auction and it hammered at $500. The coin lists for $200 in the price guides. I admit that I overpaid but I knew that the total proceeds are going to the Newman charitable foundation. Under the US income tax rules and I am expanding this a little bit, a charitable donation is allowed for the amount donated to a charitable foundation less the fair market value of any goods received. Heritage is the agent for Newman Foundation. Can't I claim a charitable donation for $300.

STONE

I too thought of this scenario, but I do not think it would qualify since you did not make a direct $300 contribution, and therefore 'fair market value' is a very vague term full of controversy! Especially given that this coin was sold at a public auction, the auction price probably qualifies as being of 'fair market value'.

But I could be wrong since I am not a Tax guy!

291fifth

I'm quite sure the IRS would disallow any attempt to take a deduction. This is exactly as it should be. The bidders were buying coins, not donating to a charity.

Sonorandesertrat

<< <i>I'm quite sure the IRS would disallow any attempt to take a deduction. This is exactly as it should be. The bidders were buying coins, not donating to a charity. >>

tradedollarnut

Welllllll.....how is buying a coin with an estimated market value of $5,000 for $10,000 any different than buying a trip at a charity auction with an estimated market value of $5,000 for $10,000? In the latter case, you deduct the difference.

In my mind, an argument could be made that the situations are similar.

bidask

<< <i>Welllllll.....how is buying a coin with an estimated market value of $5,000 for $10,000 any different than buying a trip at a charity auction with an estimated market value of $5,000 for $10,000? In the latter case, you deduct the difference.

In my mind, an argument could be made that the situations are similar. >>

that approach on a tax return might invite an audit

Billet7

I think it is a valad point, but in my case not worth the chance of negative reprocussions.

tradedollarnut

<< <i>

<< <i>Welllllll.....how is buying a coin with an estimated market value of $5,000 for $10,000 any different than buying a trip at a charity auction with an estimated market value of $5,000 for $10,000? In the latter case, you deduct the difference.

In my mind, an argument could be made that the situations are similar. >>

that approach on a tax return might invite an audit >>



Oh, I agree. I'm just saying there's a distinct similarity. I once bought Garth Brooks' guitar and hat for a charity auction. I deducted the difference as in the case above.

In my mind, the main difference is that I got a donation letter from Teammates for Kids - Heritage does no such thing.

TomB

No chance.

ColonelJessup

<< <i>No chance. >>



NFW. .

Now, if you were to form a church..... .

This can be done online, but you still have to file for a separate tax number. .

keyman64

<< <i>In my mind, the main difference is that I got a donation letter from Teammates for Kids - Heritage does no such thing. >>

This. I have participated in many charitable auctions but you would have to get the Tax ID for the Newman Foundation and paper work of sorts or create it... Just too inviting of trouble in my view. I have enough headaches to deal with and I am not interested in adding to the problems.


In principle though, I do agree they are exactly the same as going to a charity auction/fundraiser, paying $500 for dinner then getting $400 written off...and then if you buy anything in the auction the write off is the amount over fair market value that you paid. This should be no different in my mind.

Nickcap

US Tax code on charitable Contributions. ...



For a contribution of cash, check, or other monetary gift (regardless of amount), you must maintain as a record of the contribution a bank record or a written communication from the qualified organization containing the name of the organization, the date of the contribution, and the amount of the contribution. In addition to deducting your cash contributions, you generally can deduct the fair market value of any other property you donate to qualified organizations. See Publication 561, Determining the Value of Donated Property. For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed. The acknowledgment must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services. One document from the qualified organization may satisfy both the written communication requirement for monetary gifts and the contemporaneous written acknowledgment requirement for all contributions of $250 or more.
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without written acknowledgment from the Newman Charity, the answer is No

Coinosaurus

I suspect this sale has been framed for the tax benefit of the consignor, not the buyer

Mowgli

Your charitable contribution will be taken when you sell that coin at a loss.

EastonCollection

Its actually interesting - at least for me. Under the IRS tax regulations, if a taxpayer makes a payment to a charitable organization, no part of that payment qualifies for a charitable donation unless the taxpayer intends to make a payment in an amount that exceeds the fair market value of the goods received and makes the payment. There is a revenue ruling out there allowing an agent (Heritage in this case) to collect such funds and remit those funds to the charity provided that the agent has an agency relationship with the charity (and I believe it does).
I agree that the bidders did not have any charitable intentions at the time time bidding and then you lose the deduction, but in someone's case, they might have known that they were overpaying for the coins with the intention of giving the excess to Newman's charitable organization.
Lastly, I do agree that the taxpayer needs to obtain paperwork from either Heritage or Newman's foundation acknowledging the receipt of a charitable contribution and even give an amount for the fair market value of the coins bought This may not have been thought about by Heritage nor the foundation, but that doesn't lose your donation. There is more on this but just to conclude that this is no charitable contribution is something lost.

PS- if you wait to sell it and suffer a loss, then the loss is a capital loss only to offset your capital gains plus $3k.