Originally Posted by
Trippgal
if the winner puts the item on their taxes as a donation the charity will subtract the fair market value from the amount bid as the amount donated for charitible purposes.
We had a starving artist donate a piece once and he said the value was oodles more than the average price of any piece he had ever done. It was like, duuuuuude. What are you thinking? You do charcoals at the market for 20$. And you want to claim this portrait of Elton John is worth 2k$. Uhhhhh no. Sure you get to claim it as a donation to a charity on your taxes but duuuude.....
Somewhat OT, but...If the charity is providing the winner with an 'adjusted' donation amount, it is in violation of tax law. It is up to the individual to determine their deductible amount, not the charity, and the charity is putting itself at risk if it does so. That is why the common disclaimer of "Donations are tax deductible to the extent allowed by law" is used when a donation might not be fully tax deductible.
As for the artist, what's between him and the IRS is none of the charity's, nor the fundraiser's, concern. His deductible amount depends on how his business, if any, is organized and several other factors. The value he assigns to a donated work will seldom, if ever, be the same as his tax deductible amount.