J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

14.3 Contributions That Provide You With Benefits

A contribution to a qualifying organization (14.1) is generally deductible only to the extent that you intend to give more than the value of benefits you receive and actually do so.

If you contribute $75 or less and receive benefits, the organization may tell you the value of the benefits. If your contribution exceeds $75, the organization by law must give you a written statement that estimates the value of the benefits provided to you and instructs you to deduct only the portion of your contribution that exceeds the benefits. However, the disclosure statement does not have to be provided to you if you receive only token benefits, or if you receive from a religious organization only “intangible religious benefits.”

EXAMPLES

1. You contribute $200 to a philanthropy and receive a book that you have seen on sale for prices ranging between $18 and $25. The charity estimates the value at $20. As the estimate is between the typical retail prices, it is acceptable to the IRS. Although the book sold at a price as high as $25, you may treat the $20 estimate as fair market value and claim a deduction of $180.

2. A charitable organization sponsors an art auction and provides a catalogue that lists the items being auctioned and estimates of fair market value. The catalogue lists the value of a vase at $100. At the auction, you bid and pay $500 for the vase. Because you were aware of the estimate before the auction and paid more for the ...