QUESTION: What can a participant deduct for a special event?
ANSWER: The general rule for special events is that participants can take a charitable deduction for the part of the event fee that exceeds the benefit to the participant. For example: if a dinner ticket to an event in $150 per person and the value of the dinner is determined to be $100, the attendee can take a $50 charitable deduction. It is the responsibility of the nonprofit to notify the attendee of the value they received. This is an IRS requirement when the value received by the participant is more than $75.
QUESTION: How should the nonprofit notify the participant of the value of the special event?
ANSWER: There are several ways a nonprofit can do this. The notice can be printed on the ticket to the event. $50 of this ticket price represents a charitable contribution. It can be part of the text of a follow up thank you note from the event. Thank you so much for joining us as we celebrated 25 years of fighting poverty. We raised over $30,000 at our event. Please note that the FMV of the dinner was $100 and $50 of the ticket price is a charitable contribution.