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Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1408
Experience:  JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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we are running a fundraising for a non-profit organization.

Customer Question

we are running a fundraising for a non-profit organization. One of the sponsorship levels we are offering will give the donor the chance to participate in a video chat with a known actor.

we are trying to understand if we need to assign a Fair Market Value to the chat or it can be considered (as it is not a one to one chat) a token item (no value).
and if we have to assign a FMV , how can we calculate it?
Submitted: 5 years ago.
Category: Tax
Expert:  Jax Tax replied 5 years ago.

Jax Tax : I have thought this through. There is no value to such a prize. I beloved if any it is de minimus Ans as such is of no value. No, you do not need to assign a value.
Customer:

is there any documentation from IRS that defines what can be considered de minimis? the chat is a donation from the actor and he usually chats with his fans no charging anything, so I guess it qualifies as a not cost item, but not sure about the FMV value.thanks

Expert:  CGCPA replied 5 years ago.

Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.

 

The guide for this is Fair Market Value (FMV). Since the actor regularly and freely engages in this practice at no charge the FMV would be zero. Here is a bit from IRS Publication 561:

 

What Is Fair Market Value (FMV)?

To figure how much you may deduct for property that you contribute, you must first determine its fair market value on the date of the contribution.

Fair market value. Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts. If you put a restriction on the use of property you donate, the FMV must reflect that restriction.

Expert:  Jax Tax replied 5 years ago.
De minimus is mostly defined by example and unfortunately a chat is not included in those examples. It simple means something of so little value that it is OK to assign no value to it because there is little to no accession of wealth which means the person receiving the item is in no better place financially. I would say that is true here since as you state, it is typically done for free.
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1408
Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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Expert:  Jax Tax replied 5 years ago.
Please let me know if I can be of further assistance.