1. What constitutes the fair market value of a donated item?
Answer: It is the Donor’s responsibility to state what was paid for the item originally or, to the best of his/her ability, what the item would be sold for.
The IRS defines fair market value as:
“the price a willing buyer will pay a willing seller, in the normal marketplace in which the item is sold, neither being under any compulsion to sell.”
Therefore, new or used items available for sale at a retail establishment (physical or electronic) would be valued according to the normal selling price of the item. The valuation for collectables, such as art and antiques, worth more than $5,000 must be established by the written opinion of a qualified appraiser and submitted with the donated item.
For items valued worth less than $5,000, a written opinion (an informal appraisal by an antique dealer) is helpful to document the valuation that may be claimed for income tax purposes.
2. How do I value sports memorabilia?
Answer: The price for which such items normally sell at a retail sports memorabilia store is the valuation for tax purposes. For unique and unusual items valued at less than $5,000, a letter from such a store is suitable. Again if the item is worth more than $5,000, a formal written appraisal is required.
3. What if I bought something in a foreign country that cost relatively little but would sell for a higher amount in the United States?
Answer: Technically, the price one paid is not necessarily evidence of an item’s value. Even though an item is unique and not normally sold at retail establishments in the U.S., the donor has a responsibility to set and document a valuation. Again either an informal written opinion or a qualified appraisal may be necessary to document the value.
4. How do I decide the fair market value for a stay at our family’s vacation home?
Answer: If your family rents the house, the fair market value is established by your rental rates. If you do not rent your home, but other homes in the area are available for rent, the price charged for use of a similarly situated and sized home establishes the value. If there are no comparative commercial rentals, the cost of electricity, amenities, supplies, etc., for the donated period, may instead establish the fair market value.
5. What if I have an antique or a painting to donate?
Answer: You, as the Donor, must place a fair market value on the item before donating it to the Auction following the standards set out in question #1. If you plan to claim an income tax deduction for the donation and you believe the item to be worth over $5,000, the tax rules require you have a written appraisal from a licensed appraiser.
6. Will the Auction office accept an item given early in the year, have it picked up, and store that item until Auction time?
Answer: Yes. Just call the Auction office at 713.512.3442 and pick up will be arranged.
7. When is it too late to donate an item to the Auction?
Answer: If you plan to give a specific item to the Auction, which will be ready for pick up just days before the Auction, please submit a completed contract before the donation deadline, which is printed on the contract. Your item can then be described in the book and space may be arranged for the item on the Auction table.