Not-for-profit organizations: how to record donations for Silent Auction?

Answer 1

The nonprofit sends a letter to the donor, saying, "Thank you for donating the following item..." The nonprofit can't put a value on it. So, if the donor has a receipt for buying it, they could staple that to the letter and file it with their taxes. Or, the donor could get an appraisal for it, and take that amount off their tax returns.

If someone buys the item, they can't deduct the donation as a contribution unless they donated an amount in excess of what it is worth.

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Answer 2

Ebay was right that only the amount you paid over fair market value (FMV) is deductible as a charitable donation. However, the FMV includes more than the actual cost of the item. FMV is calculated at what one could reasonably expect to pay the item for the item at the time you purchased it. Since you purchased something that is arguable collectible, that has to be considered in calculating the FMV. Unless other portions of the curtain were also available for sale and you paid far more than other bidders, I would think it best you not try to claim this as a charitable donation.