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Gift benefit question

  • 1.  Gift benefit question

    Posted 4 days ago
    As part of a fundraising effort for one of our departments, they are offering a gift to those who donate over the $500 threshold.  They are remodeling our student mail center and our facilities team is making replica mailboxes out of the the old mail box plates.  This is clearly not an item that you could purchase elsewhere to estimate a market value, but our facilities team is being paid to make them by the other department.

    Do we need to deduct the "value" of what we are paying to have the mailboxes made from the donations we receive?

    Jennifer Kenzor
    Executive Director of Advancement Services
    Rose-Hulman Institute of Technology

  • 2.  RE: Gift benefit question

    Posted 4 days ago
    You need to assess the FMV by some method. I would advise against setting the FMV as the cost of making the replica mailbox, as I think that undervalues the item substantially. Instead, I might analogize to some other similar product, eg when stadiums are torn down, they often will sell the old seats to fans. Or I might look at the cost of other novelty mailboxes. Whichever method you choose, it should be documented, and you do need to deduct the value that you determine from the gifts you receive.

    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151

    Schedule a 30-minute consultation now:

  • 3.  RE: Gift benefit question

    Posted 4 days ago
    The IRS requires you to make a "good faith estimate" to calculate the FMV of these items.  You are off the hook if that is under the $11.70 insubstantial benefit value for 2022 ($12.50 in 2023).  If worth more than that you could raise the minimum gift amount to something like $1,000 and get away with benefits worth $20 (the 2% rule).

    However, if the estimated value exceeds these limits, you must treat them as QPQ.


    John H. Taylor
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987