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kswarriors
07-08-2008, 07:32 PM
For each Mother's Day auction item, MLB states that "90% of the proceeds from this auction will be donated to charity." Does anyone who has won one of these auctions from the past couple of years know whether MLB sends the won item along with a letter confirming the extent to which the final winning bid can be used for tax purposes? I'm not sure if simply printing the "90%" comment from the website would be enough to satisfy the tax man.

CampWest
07-09-2008, 09:36 AM
My tax is a little rusty, but I dont think you can claim a 90% deduction based on that. That just means that the seller is donatingr 90% of the sale, doesn't really have anything to do with you. As a buyer, you probably can only claim a deduction from a charity auction purchase for the amount of your purchase that exceeds the fair value of the item. As an example, if you buy a $100 item for $150 then you can deduct the difference of $50, not all $150 or percentage thereof.

That said, I am not positive on how the IRS would determine fair value for a bat in this case. They could make the argument that the value of the bat is what you paid as non-charitable sales on the secondary market, mirror those in MLB.com charitable auctions, and therefore there is no deduction. I would be very careful about claiming deductions for buying memorabilia.

I would recommend checking out Publication 526 and speaking with a qualified tax pro.

http://www.irs.gov/publications/p526/index.html

kswarriors
07-09-2008, 01:50 PM
I did and that's the impression I am getting too -- that none of the bid price for Mother's Day MLB memorabilia is deductible, regardless of the fact that MLB donates 90% of the winning bid to the Komen Foundation. Thanks for the input.

metsbats
07-09-2008, 09:50 PM
You are paying MLB auctions for the bat (via check, MO, or CC) not the Komen Foundation so I wouldn't think the buyer can take the deduction.

So it doesn't it seem that MLB would get the deduction as they eventually pay the Foundation?

David

frikativ54
07-09-2008, 11:24 PM
IDK but they specifically state in auctions like the following that the donation is tax deductible. This is not for the pink bats though. http://auction.mlb.com/cgi-bin/ncommerce3/ProductDisplay?prrfnbr=95511422&prmenbr=33072944&aunbr=95858132

eGameUsed
07-10-2008, 10:32 AM
Campwest is correct! You can not write off 90% of what you pay. You can only wite off any amount paid above the fair market value for an item. For example, if you pay $1500 for a Kazuo Matsui GU Pink Bat, what is the fair market value? Well, you set the fair market value at $1500. Therefore you write off $0. Now, if you have a picnic with Jacoby Ellsbury, what is the fair market value? Well, let's say the picnic lunch cost $100 (or at least whatever the Bo Sox tell you it cost them). If you pay $5000 to meet a person ($0 value), then you can write off $4900.

The issue with collectibles is that there is no book value. When it comes to donations when something is received in return, Uncle Sam wants proof. Now, if the charitable organization is willing to give you a letter stating the fair market value, then you are set. A few years ago, I bought two Albert Pujols bats through MLB.com and the Cardinals Charities. I received a letter for each bat that stated the fair market value of the cracked bat was $100. Therefore, I was able to write off anything I paid over the $100.

You really have to be careful though and make sure you don't double dip. These two bats obviously went into my business/collection inventory. The inventory "cost" for each bat was $100 since I chose to write off the amount over that. If for instance I later sell one of the Pujols Bats for $3000, then I will have realized a profit of $2900 on that bat.

Hope the above makes sense! I strongly suggest you seek a trusted tax professional. Before I decided business and accounting was not what I wanted to do for the rest of my life, I had a couple of years of education in Tax. Now that I own my own business, have partnerships in two other businesses, and my wife is self-employeed, I have a LITTLE experience in tax and tax law.

Thanks,