AuctionTags - Charitable?

Iowan

Iowan

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Please do not turn this into a debate about auction tags. I have a health issue that has me thinking about buying a tag possibly in 2020 just in case things do not turn out great. This is a question for you CPAs out there or even better someone that has purchased an auction tag and been through this process. There are a number of tags auctioned by SFW, RMEF, etc. I have seen some suggest that if you purchase an auction tag they can be considered charitable contributions and used as a tax deduction.

So let's assume I attend the 2020 Expo and purchase the Wasatch Premium Elk hunt for $15,000. I write a check for $15,000 to SFW. If I can deduct this as a charitable contribution my actual cost is closer to $10,000 via avoided taxes. For this to be possible SFW would need to provide me a receipt showing the amount I paid at $15,000 and the value of what I bought at $0 or some low amount.

I would really love to see a receipt that someone was issued for any auction tag bought from a 501c(3) like SFW-RMEF, etc.

Again this is a serious question as I might look to buy a tag in 2020. I would love to see someone like Hawkeye weight in.

Thank You.

Russ
 
LAST EDITED ON Mar-01-19 AT 09:17AM (MST)[p]Russ-

I hope all is well and you are not facing any serious health issues. I am not a tax lawyer so take my comments for what they are - my personal opinion rather than formal legal advice. If you were to purchase an auction tag from a 501(c) charitable organization, you will receive a receipt from that organization showing what you paid for the tag. Let's follow your example where you purchase a Wasatch Premium Elk Tag for $15,000. The conservation group would give you a receipt showing that you paid 15K for the tag.

How you handle that on your tax return is up to you and your CPA. It is my understanding that because you purchased that tag through a 501(c) group you are allowed to deduct the amount you paid for the tag that in excess of fair market value (FMV). In other words, the amount of the charitable contribution is the amount you paid over and above the FMV of the item you purchased. What is the FMV of a Wasatch Premium Elk Tag? That is the key question. Some folks take the position that if you drew the tag as a Utah resident you would only pay the DWR $513 for the permit. As a result, they take a deduction for nearly $14,500 - the difference between the amount paid at the auction and the licensing fee charged by the DWR.

It would not surprise me, however, if the IRS took a very different position on this issue. There is a track record of what people are willing to pay for such a tag. For instance, a simple Google search reveals that somebody purchased that same tag for $15,500 at the 2017 Hunt Expo Auction. What if you consider that in 2018 the same tag sold for $18,000 at auction? Is that better evidence of the FMV of the tag you purchased? Would the IRS look to this information as evidence of the true FMV for the tag you purchased? Perhaps the true FMV is somewhere is the middle between the price these tags sell for at auction and the license fee paid to the DWR?

In conclusion, I would be careful if I were purchasing one of these tags for the purpose of taking a big fat tax deduction. Be sure to consult a qualified tax professional and make sure that you do it the right way. I would be interested in hearing from folks who have been through this process.

-Hawkeye-

My Favorite Expo Tag Quotes:

"It is fair to ask how much comes in with the five dollar application fees and how much went onto the ground.? Don Peay of SFW during 3/31/2005 Wildlife Board Meeting.

"There will be a full accounting of how the applications fees are spent.? Don Peay of SFW - 9/26/2006 - Monstermuleys.com
 
You need to really get your own tax's guy involved in this decision. But I think I have a good idea how this goes to help you. Not that I buy auction tags at the Expo. Each hunt has a value. Say a bear hunt has a 5000 dollar value. You pay 10,000 for the hunt. You can deduct 5000 of your hunt. But What Some of these high rollers do if the need a full wright off. My neighbor kid is in a wheel chair. Someone that is pretty well known for buying auction tags.Buys a tag and donates it to the kid in the wheel chair. He gets to write off the full amount. Something a little closer to what us little guys might do. Okay say you go to a SFW or RMEF dinner and buy a sponsor package. Can you write it all off ? No what valve you did you get out of making a donation buy purchasing a Sponsor package? The meals you get are your gain and they need to be taken off the deduction price. I am no paper pusher. Like I said some accountants are more daring then others. So contact yours. This is why at a lot of these auction you see things go for more then their value. Hope this helps a little. I am sure we will hear a few others take on the subject.
 
My CPA told me he would only be 99% comfortable if the receipt provided by the charitable group showed the amount paid and the FMV. He said the FMV piece is extremely difficult to gauge here. He said it is not completely unreasonable to use the theory that you can draw the tag and then pay the license fee. So the FMV would be the difference between what you paid and the state license fee.

I would not buy it for the purpose of the deduction but if I bought it the deduction would take some of the sting out of the price.

The purchase of an auction tag would also put me in a position to continue to itemize my federal return if I bought it in 2020. I am able to do that in 2018 and 2019 but my major deduction (a donation of land to the Iowa Natural Heritage Foundation)is exhausted in 2019 tax year.

I have been audited twice and I also worry a deduction like this might red flag me. Being audited is not the worst thing that can happen but it is not enjoyable either. I have no doubt many people are deducting these on their tax returns, you would think there is some guidance on this somewhere.

Thanks.
 
I would be interested to know if the conservation groups list a FMV for the auction tag on the receipt given to the lucky bidder. I would be surprised if they do because I think they want to leave that open so that buyer can decide what position he wants to take on his tax return. I believe that many of the successful bidders are taking a deduction for the full difference between the amount they paid at auction and the license fee charged by the DWR. But what do I know? Where are all of the high rollers that frequent this website?

-Hawkeye-

My Favorite Expo Tag Quotes:

"It is fair to ask how much comes in with the five dollar application fees and how much went onto the ground.? Don Peay of SFW during 3/31/2005 Wildlife Board Meeting.

"There will be a full accounting of how the applications fees are spent.? Don Peay of SFW - 9/26/2006 - Monstermuleys.com
 
I think what you bid and buy at auction is a voucher which allows you to buy or receive a permit from the division. I don't know if the division charges a fee when you redeem the voucher or not. I do believe you at least have to have a hunting or combination license. The fair market value I believe is what the division charges you for the permit.
What you're writing off on your taxes is the donation to the conservation group. The highest donation gets a voucher that gives them permission to buy or receive a permit from the division. If the division charges nothing for the permit, then the fair market value of the permit is nothing.

Brian Latturner
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Sounds like maybe the conservation groups may pay any license or permit fees.

---------------------

(3)(a) Conservation permits shall not be issued to a person possessing a conservation permit voucher unless the person redeeming the voucher:

(i) possesses a valid Utah hunting or combination license;

(ii) remits to the division the applicable permit fee ; and

(iii) is otherwise legally eligible to possess the particular hunting permit.

(b) If the conservation organization is paying the permit fees for the permit recipient, the fees must be paid from the 10% retained by the conservation organization as provided in Subsection (5)(a).

https://wildlife.utah.gov/rules-regulations/970-r657-41--conservation-and-sportsman-permits.html
---------------------



Brian Latturner
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You do have to buy the license and tag. The value on the tag is listed at what the tag sells for from the state. At least that has been my experience.
 
Not even close to a cpa.

But man if your thinking about buying a tag because of bad health, BUY THE TAG!!!

Dad and I talked about Alaska, a lot. Then he wasn't here any longer. One of my biggest regrets that we didn't go. BUY THE TAG man. Then hopefully things go well and you can buy another the next year.

Good luck brother!!!



From the party of HUNTIN, FISHIN, PUBLIC LAND.
 
Same disclosure as everyone else. I bought a voucher that allowed me to put in for a draw on a LOP tag in Oregon. The Land owner give the rights to sell the tag to Red Cross. I wrote a check to Red Cross. With that I wrote the whole amount off as a donation. The next one I bought a fishing trip at a banquet. We opted to upgrade what was donated. I wrote the check to OHA (Oregon Hunter Association) as a donation, then the extra paid directly to the guide was not. Not sure what the law really states but I feel like it is a donation. Mine have been small dollars, when you start talking a large percentage of your tax burden it might show up more.



Wonder if anyone on here has been dinged in an Audit before.

DZ
 
Hossblur I like the way you think!

The problem is I am still pretty young 48 and my daughters are 12 and 15 so of course my first priority is making sure everything is in order for them just in case. The good news is that in the unlikely event this issue gets me I have things lined up where I can 'waste' a little money on a special hunt.

I am going to start burning all points - you cannot take them with you I am told. It will take me ten years to burn through all my points so I am getting after that starting now.
 
At the auction you are buying a voucher that allows you to purchase the permit.

You are still required to take the voucher to the fish and game and pay the established fair market value for the permit. This makes the amount you payed for the voucher a donation to a 501c organization for the opportunity to purchase a permit.

This is very different from attending an auction and buying a guided hunt for $10,000. If you spent 10K on the hunt and the outfitter charges 5K you could write off the difference, but if the outfitter charges 12K non of your money would be deductible.
 
Oh and yes you will receive a receipt from the 501C organization for the entire amount paid at the auction for the purchase of a voucher. I have bought a couple but its been years ago and do not have the receipts still.
 
As a CPA, the best advice I can give is that the information provided in many of these posts is worth what you pay for it, nothing. Listen to what your CPA is telling you. He/she understands the tax law, the Regs, and the court cases, all of which create complications related to the valuation and documentation of split-interest charitable donations, such as what you have with a tag purchased at auction.

I sent you a PM, Iowan. Good luck on your hunt.


"Hunt when you can - You're gonna' run out of health before you run out of money!"
 
>As a CPA, the best advice
>I can give is that
>the information provided in many
>of these posts is worth
>what you pay for it,
>nothing. Listen to what
>your CPA is telling you.
> He/she understands the tax
>law, the Regs, and the
>court cases, all of which
>create complications related to the
>valuation and documentation of split-interest
>charitable donations, such as what
>you have with a tag
>purchased at auction.
>
>I sent you a PM, Iowan.
> Good luck on your
>hunt.
>
>"Hunt when you can - You're
>gonna' run out of health
>before you run out of
>money!"


?Hey folks, Randy Newburg here with another episode of leupold hunt talk radio?.




Sorry, couldn't resist!?
 
For a "low end" auction permit like you're talking about, where your potential charitable donation is only 15,000.00, you might or might not get much tax benefit. Of course you'd have to be eligible to itemize your deductions the following year. But already as it stands, assuming you usually file as a married couple, your standard deduction is as much as 24,000.00 (this new higher standard deduction limit started in 2018). So all your itemized stuff including the tag purchase/donation would need to add up to 24,000.00 or more, before you start getting additional tax savings above and beyond the new higher standard deduction that Trump has given you.

Possible that if you have a huge mortgage, or maybe some other massive itemizable deductions, then your auction purchase could help you on taxes.

As people stated above, good idea to check with a tax pro before you assume anything.
 
I hope your health gets better. If you can afford it, buy the tag. Have a great hunt and the rest will fall in place with you, you shouldn't have a problem with the charitable tax write off.
 
LAST EDITED ON Mar-05-19 AT 03:43PM (MST)[p]I'm a CPA but not a tax guru. My opinion is the donation is $0 because the FMV is established by the auction. If it was worthless no one would be bidding on it.

If everyone could make the same donation and get a tag it would be a different story - that would be a true donation that would be tax deductible.
 
When you go to tax court, just have your valuation expert do his/her FMV using comparable hunts. For example, if your ?donation? tag is on a unit that averages a so and so inch pisscutter and you can buy a landowner tag on a unit that shoots similar pisscutters for $5,000 then that is your FMV.
 
The Utah Game & Fish have a set and published value for a limited entry permit. That's the FMV. What something sells for in an auction isn't then the FMV or nothing ever bought at auction for more than it's value would be tax deductible, because the FMV would always be equal to the winning bid and that would make no sense for the purposes of charity auctions.

If a backpack has a published value of $100 (retail price), but someone buys it at a charity auction for $150, one can write off $50 as a charitable donation.

If ever questioned, the IRS would simply want proof of the value of the permit. The hunting regulations publish that value, and it's what everyone pays for the permit.

https://www.irs.gov/charities-non-profits/charitable-organizations/charity-auctions

If you do talk with a tax guy, let us know what they say, but it sure seems pretty straight forward to me.

Brian Latturner
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Being a tax guy, it's easy for me to talk to one.

As for going to Tax Court, by the time you end up in Tax Court, you've spent way more in attorney and CPA fees than what you are gong to save in taxes, even if you do prevail; something very unlikely when claiming an auction tag as a charitable donation.

The idea that the state listed price for a tag is FMV sounds good, but I suspect the auditor is going to get a big smile out of that. State listed fees have no impact on FMV. It is like saying that what the local county assessor has as appraised value for property taxes is what folks sell their houses/ranches/property for. Certainly not the case.

There are mountains of cases and IRS rulings as to what establishes Fair Market Value, not just for charitable donations, but gifts, inheritance, bargain sales, etc. Presence of an existing market, via auction or traded market, will be one of the first places the IRS looks to determine the value.

The FMV is established by the many auctions themselves, not just for tags, but artwork, real estate, business values, mineral interests. You name it, if there is a robust auction market, that is what is going to establish FMV for the item in question. Utah, has been doing these auctions for years, which establishes the FMV for the Utah tags.

These tags confer a lot of benefits that don't come with the tag you might draw in the limited-entry drawing, which is why people pay high dollar for the opportunity to hunt those tags.
Benefits a tag may have that a tag drawn in the state drawing systems could be any of these and not limited to these:

- Avoid the long wait to acquire the tag in the limited-entry drawing.
- Be exempt from waiting periods that come with limited-entry tags.
- Multiple season types.
- Expanded season dates.
- Known quality of the hunting unit for which the tag is drawn.
- Multiple units that can be hunted

The list of added values is long. The fact that people have been buying these, and similar, tags at auction shows that the FMV is very high; much higher than what you pay to be in the long lines that are the limited entry drawings. In fact, Utah selling as many as they do (more than any state I'm aware of), establishes a market from which FMV will be derived for purposes of this charitable donation idea.

Since FMV will be determined by what was paid at auction, there is not deduction for amounts paid in excess of FMV. In other words, no deduction for the price paid.

I hear people bragging that so and so, the rich uncle, or their employer, or (insert name here) bought an auction tag and deducted it. Makes me laugh. Deducting on a tax return is one thing, defending and prevailing when audited is a completely different game.

I am sure the original poster will seek professional tax advice and make the proper assessment of such.




"Hunt when you can - You're gonna' run out of health before you run out of money!"
 
Thanks Randy. Your advice as a CPA is about what I thought it would be. Just because some folks are buying these tags and deducting the full amount does not mean that it is legal or that it will hold up in a IRS audit. Best of luck to the original poster!

-Hawkeye-

My Favorite Expo Tag Quotes:

"It is fair to ask how much comes in with the five dollar application fees and how much went onto the ground.? Don Peay of SFW during 3/31/2005 Wildlife Board Meeting.

"There will be a full accounting of how the applications fees are spent.? Don Peay of SFW - 9/26/2006 - Monstermuleys.com
 
This here explains how the IRS determines Fair Market Value.

This here would pertain to a hunting permit.
"The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent's gross estate is not to be determined by a forced sale
price. Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public,"

"the fair market value of such an item of property is the price at which the item or a comparable item would be sold at retail."

FMV is determined by retail, not auction.

The hunting permits are most commonly sold to the public by the Game and Fish for the price listed in the regulations. The FMV is not set by "a market other than that in which such item is most commonly sold", such as a charity auction.

This material from the IRS/Treasury explains how FMV is determined by the IRS.

Read valuation of property in general
https://www.govinfo.gov/content/pkg...3-title26-vol14-part20-subjectgroup-id210.pdf

Brian Latturner
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I thought charitable donations for federal taxes got wiped out last year, but I'm not positive. Good luck with your health and if you purchase a tag, I hope you have a lifetime experience.

MIG
 
LAST EDITED ON Mar-06-19 AT 10:14AM (MST)[p]BigFin is spot on here. Take a deduction for auction tags at your own risk. i would not recommend it to anyone.

Founder you have to go beyond the definition listed and look at court cases, private letter rulings, etc.
 
Founder,

In my opinion, the state of Utah does not fit the intended definition of a willing seller in the IRS language you posted.

Any individual (willing seller) who owned a Wasatch Bull Elk tag would never sell it for the cost of the tag and license.

Excavator
 
If someone would kindly post the details of a case in which a taxpayer itemized the cost difference of a state-issued license that he/she bought at auction, claiming the difference as a charitable donation for federal tax purposes (auction price minus state-issued list price), and the donation was denied by the IRS, that would be very interesting to see.

I believe if such a rejection happened and was upheld, it would be viewed as a rather stunning development that would ripple through the conservation org community. For the auction permits sold by the various conservation orgs such as the Rocky Mountain Elk Foundation, this is a part of the way their bread gets buttered. The prices on many of these permits are buoyed by the conservation orgs practice of advertising of their org's charitable corporation status. Many of the various org's personnel have been verbally promoting this tax benefit to potential buyers for years.

I believe it is fact that thousands of these license auction purchases have been handled this way for decades. I know guys who are even doing it with raffle tickets that they buy from the 501(c)(3) orgs. Of course as mentioned above, with the new 24k standard deduction for couples, it takes a heck of an auction tag to help you out now.
 
Well, the rules are right there. I personally wouldn't even consult anyone, cause they'd do the samething and look at the IRS rules. It's pretty cut and dry to me, but anyone can make anything harder and more complex than it is if they want.
I don't think the IRS publishes rules but then expects people to ignore the obvious rules and instead dig into past court cases. That wouldn't make sense.
If I ever buy that Antelope Island tag, I'm writing it all off!!!

Brian Latturner
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>Founder,
>
>In my opinion, the state of
>Utah does not fit the
>intended definition of a willing
>seller in the IRS language
>you posted.
>
>Any individual (willing seller) who owned
>a Wasatch Bull Elk tag
>would never sell it for
>the cost of the tag
>and license.
>
>Excavator


If these were donated landowner tags being bought at auction, then I would agree that the retail value of a landowner tag is much more. But they are not, they are the same tag as what someone can draw. And those draw tags have a retail value set by the game and fish.

Brian Latturner
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I'm not a tax professional, and I don't even play one on television. (or the internet)

I simply know that many, many people have used the tag purchased at auctions as tax deductions. Maybe it is true that if they get audited, that deduction won't stand up. I'll defer to the professionals. But I do know that this has happened many, many times.
 
>Well, the rules are right there.
>I personally wouldn't even consult
>anyone, cause they'd do the
>samething and look at the
>IRS rules. It's pretty cut
>and dry to me, but
>anyone can make anything harder
>and more complex than it
>is if they want.
>I don't think the IRS publishes
>rules but then expects people
>to ignore the obvious rules
>and instead dig into past
>court cases. That wouldn't make
>sense.
>If I ever buy that Antelope
>Island tag, I'm writing it
>all off!!!
>
>Brian Latturner


>MonsterMuleys.com
>@mm_founder on Instagram
>LIKE MonsterMuleys.com
>on Facebook!


Will you at least admit that buying an auction tag provides some benefit besides the actual tag itself? I.E. you get to skip years of preference points, waiting, etc.
 
LAST EDITED ON Mar-06-19 AT 02:40PM (MST)[p]Founder-

Nobody is saying that you should look past the applicable IRS rules. They are simply saying that it is not as black and white as some would think. The IRS website dealing with charity auctions that you cited above (www.irs.gov/charities-non-profits/charitable-organizations/charity-auctions) provides as follows:

"Donors who purchase items at a charity auction may claim a charitable contribution deduction for the excess of the purchase price paid for an item over its fair market value. The donor must be able to show, however, that he or she knew that the value of the item was less than the amount paid. For example, a charity may publish a catalog, given to each person who attends an auction, providing a good faith estimate of items that will be available for bidding. Assuming the donor has no reason to doubt the accuracy of the published estimate, if he or she pays more than the published value, the difference between the amount paid and the published value may constitute a charitable contribution deduction." As I mentioned in my prior posts, the real question what is the FMV of the voucher that the hunter purchases at the auction?

As you mentioned in your Post #6, the bidder does not bid on and purchase an actual tag at the auction. Rather, the bidder purchases a "permit voucher" at the charity auction "that entitles the designated holder to purchase the hunting permit specified in the authorization." Utah Administrative Rule R657-41-2(1)(l). R657-41-9(3)(a) specifically states that successful bidder does not receive the actual permit unless he has a valid hunting license, "remits to the division the applicable permit fee," and is legally eligible to receive the permit. So once again, the successful bidder receives a "permit voucher" in exchange for his "donation." The bidder then has to redeem the voucher with the DWR, which includes paying the DWR the "applicable permit fee" in order to receive his tag.

As a result, it would not surprise me if somebody was audited by the IRS and the IRS took the position that the amount paid by the bidder at the auction for the voucher was the FMV or was at least close to FMV, particularly where there is lots of information available as to what these tags sell for at auction year after year. In addition, the IRS could very easily conclude that bidder did not purchase a LE Multi-Season Elk tag for 15K that has a value of $513. Rather, the bidder paid 15K for a "permit voucher" that allows him to circumvent the normal drawing process, hunt a premium unit, and avoid surrendering his points, etc. As a result, the FMV for that "permit voucher" is something more than $513 - particularly where the bidder still has to pay the $513 permit fee in order to redeem his voucher and obtain the actual tag.

I know lots of guys are buying conservation permits and deducting the full difference between the amount the paid and the face price of the tag. However, that does not mean that this position is supported by the applicable tax laws and regulations or that this is a defensible position with the IRS. Therefore, folks should consult a qualified CPA and proceed at their own risk.

Buy that antelope island tag, take the full deduction and then cross your fingers that you don't get audited! WE will all be cheering you on!

-Hawkeye-

My Favorite Expo Tag Quotes:

"It is fair to ask how much comes in with the five dollar application fees and how much went onto the ground.? Don Peay of SFW during 3/31/2005 Wildlife Board Meeting.

"There will be a full accounting of how the applications fees are spent.? Don Peay of SFW - 9/26/2006 - Monstermuleys.com
 
>
>FMV is determined by retail, not
>auction.
>
>The hunting permits are most commonly
>sold to the public by
>the Game and Fish for
>the price listed in the
>regulations. The FMV is not
>set by "a market other
>than that in which such
>item is most commonly sold",
>such as a charity auction.
>
>
comparing an auction tag to a draw tag that takes 15 to 20 years to draw is not appropriate. If the tag sold over the counter to anyone who wanted one I'd agree with you.
 
I think some are making this FAR more questionable than it is.
There?s only one entity that sells elk permits in Utah, and that is the game and fish and they set the value by setting a price. They are the ?willing seller?, and the only possible seller.
Just cause we all might sell the permits for $15k if they were ours to sell, doesn't make the value $15k. Just because someone is willing to donate $15k to a conservation group for a voucher that allows them to buy the $500 permit, doesn't change the value that the ?willing seller? has put on it.

I just don't see it as that questionable.

As far as the voucher, yes, I believe a highest bidder receives a voucher. The voucher allows them to buy a permit which costs $500 or whatever it is. That amount, regardless who pays it, would not be deductible because that's the price (value) that the ?willing seller? has placed on it and all the ?willing buyers? have agreed to pay that. It doesn't matter what we all would buy or pay for the permit, what matters is what the ?willing seller?, the only seller, sales it for.

The voucher that simply tells the game and fish that you have permission to buy the permit would have no value. It's simply a piece of paper to convey information between the conservation group and the game and fish.

Brian Latturner
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>>Well, the rules are right there.
>>I personally wouldn't even consult
>>anyone, cause they'd do the
>>samething and look at the
>>IRS rules. It's pretty cut
>>and dry to me, but
>>anyone can make anything harder
>>and more complex than it
>>is if they want.
>>I don't think the IRS publishes
>>rules but then expects people
>>to ignore the obvious rules
>>and instead dig into past
>>court cases. That wouldn't make
>>sense.
>>If I ever buy that Antelope
>>Island tag, I'm writing it
>>all off!!!
>>
>>Brian Latturner
>
>
>>MonsterMuleys.com
>>@mm_founder on Instagram
>>LIKE MonsterMuleys.com
>>on Facebook!
>
>
>Will you at least admit that
>buying an auction tag provides
>some benefit besides the actual
>tag itself? I.E. you get
>to skip years of preference
>points, waiting, etc.


I can't do that because a person could draw a tag with zero points, so no definite advantage there and based on the rules, the waiting period in the draw would still apply to those buying permits;

(4) Any person who obtains a conservation or sportsman permit is subject to applicable waiting periods for purposes of obtaining a permit for the same species through a division drawing, as provided in Rules R657-62.

The ?etc? part......maybe. Ha ha

Brian Latturner
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when you buy a voucher the guy still goes to the dwr and buys the license. the comparative value is in time and not dollars. a vernon deer landowner voucher is 5k but the conservation tag is 10k. most likely could claim 5k deduction.
 
Brian, I agree with most of what you are saying. However, you are not buying an elk permit with a face value of $513 for 15K at the auction. Rather, you are buying "permit voucher" that allows you to then purchase the permit for $513 from the DWR. As a result, it is not that crazy to assume that if there is an audit the IRS may ask what is the FMV of the "permit voucher" that was purchased at the auction? You would argue that the FMV of the "permit voucher" is $513 - the amount that you are still obligated to pay the DWR to get the tag. I think the IRS may look at the amount you paid at the auction or the amount similar tags have sold for at auction as better of evidence of the true FMV of the "permit voucher."

That being said, I am sure that most folks (including some I know) have bought conservation permits at these auctions and taken a deduction for the full amount paid less the face value of the tag. That does not mean that IRS agrees with this approach or that it would hold up in an audit. I personally would consult a CPA before taking such a position. As one of my tax professors used to say in law school, "the pigs get fat and the hogs get slaughtered!"

-Hawkeye-

My Favorite Expo Tag Quotes:

"It is fair to ask how much comes in with the five dollar application fees and how much went onto the ground.? Don Peay of SFW during 3/31/2005 Wildlife Board Meeting.

"There will be a full accounting of how the applications fees are spent.? Don Peay of SFW - 9/26/2006 - Monstermuleys.com
 
Well, based on the IRS information I cited, I'd write it off. There's not much doubt in my mind on whether I'd need to worry about an audit. If I were audited, then the IRS would send an audit letter asking for me to show FMV, which I think the published prices in the regulations would suffice. If not, then the IRS would disagree and then I'd just pay the tax and penalty on the deduction or challenge it further. They're not going to come breaking down the door with guns drawn or throw me in jail. I think that what's in the document I linked to by the IRS would be plenty for a person to believe what I believe.

Talking with a CPA sounds great, but he's going to look at the same information and then make an educated guess. Maybe it'd be an educated guess. There's almost zero chance you'd find a CPA who has actually dealt with this issue with the IRS.

There's been a couple of these permits (vouchers) auctioned off over the years. I would guess that most have written the bid amount off as a donation. Had someone ever been audited and lost, I think it would have gotten back to the organizations by now and they wouldn't be advertising the fact that it could be tax deductible, because there would be proof to the contrary. I doubt in all these years the IRS simply hasn't ever noticed the huge donation by some well to do folks who would be prime for an audit. Nope, I think it's been looked at by a few auditors by now.

Now, if you all could just donated some dough to me, I'll buy that AI tag and we'll see what happens when I write it off. I'll sacrifice and be the "pig" or "hog" on this one. It'll be my gift to all of you. ha ha ha

Brian Latturner
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LAST EDITED ON Mar-07-19 AT 01:26PM (MST)[p]LAST EDITED ON Mar-07-19 AT 01:24?PM (MST)

From above:
"However, you are not buying an elk permit with a face value of $513 for 15K at the auction. Rather, you are buying "permit voucher" that allows you to then purchase the permit for $513 from the DWR."


It seems logical that you are buying the voucher and not the tag, since you still have to buy the "$513" tag. So with that in mind the FMV for the voucher could be the $10 application fee.

Someone that drew with zero points paid $10 FMV for the for the privilege of paying $513 FMV for the tag.

$15,000 minus the $10 FVM equal a $14,990 potential write off. :) :)


These type of charitable auctions for tags are not new. There should be some kind of legal precedence already established for this scenario.
 
>LAST EDITED ON Mar-07-19
>AT 01:24?PM (MST)
>
>From above:
>"However, you are not buying an
>elk permit with a face
>value of $513 for 15K
>at the auction. Rather, you
>are buying "permit voucher" that
>allows you to then purchase
>the permit for $513 from
>the DWR."
>
>
>It seems logical that you are
>buying the voucher and not
>the tag, since you still
>have to buy the "$513"
>tag. So with that
>in mind the FMV for
>the voucher could be the
>$10 application fee.
>
>Someone that drew with zero points
>paid $10 FMV for the
>for the privilege of paying
>$513 FMV for the tag.
>
>
>$15,000 minus the $10 FVM equal
>a $14,990 potential write off.
> :) :)

where are you getting the $10 figure?
 
LAST EDITED ON Mar-07-19 AT 01:33PM (MST)[p]FMV for the voucher could be the "equivalent" of the $10 application fee from the regular draws.

If I were to get the tag from the regular draws, and not at auction. The voucher would cost me a $10 public draw application fee and a little luck. Followed by buying the actual tag at $513

At the auction, thee voucher would cost me a $15,000. Followed by buying the actual tag at $513
 
The burden is up to the taxpayer to show that the value is less than the price paid at auction if they want to claim a deduction on their tax return.

Here is a snipet from a revenue ruling from the IRS"

As a general rule, where a transaction involving a payment is in the form of a purchase of an item of value, the presumption arises that no gift has been made for charitable contribution purposes, the presumption being that the payment in such case is the purchase price.

Thus, where consideration in the form of admissions or other privileges or benefits is received in connection with payments by patrons of fund-raising affairs of the type in question, the presumption is that the payments are not gifts. In such case, therefore, if a charitable contribution deduction is claimed with respect to the payment, the burden is on the taxpayer to establish that the amount paid is not the purchase price of the privileges or benefits and that part of the payment, in fact, does qualify as a gift.
Click to expand...

By definition, an auction generally means that a very accurate real time value has been set on the item up for auction. If the bidding on the elk tag went back and forth and settled on $15,000 and then the winning bidder went ahead and wrote a check for $20,000 for the permit, they would be entitled to claim a deduction for the extra $5,000 they paid, but not for the $15,000 that they had to bid to win the auction.

My 2 cents. Also a CPA but I only do my own taxes. I get paid to tell people if their financial statements are correct or not.
 
I came upon this thread trying to find answers to the same question as the original poster.

It seems to me that you cant begin to assess fair market value without identifying what it is that is of value. If one were to purchase a Dall's sheep hunt in the Yukon it becomes obvious(to me) that the "value" is in the guiding services, as these hunts are sold regularly and the value can be easily ascertained. Any price paid above and beyond the outfitters published price would constitute the charitable deduction.

If one were to purchase, say a Utah conservation sheep permit, it does not carry any inherent value of services included. Therefore what is the value? You have to purchase a hunting license and a tag in addition to the voucher so the price of the tag isn't included in the value. The voucher itself carries no inherent value either, as the second you sign the winning bid slip, it becomes a non transferable wasting asset. Its hard to argue something you cant sell, that becomes nonredeemable in less than one year has value. The actual value seems to be two fold: the opportunity to hunt that the voucher represent, and the knowledge that the money you spend is going to go to a charitable cause. It is virtually impossible to segregate and apply a proportion to each of these two things.

I agree that some states and some auction tags provide known benefits over a draw tag, extended seasons, available units etc. But to argue this as added value that constitutes 100% of the auction bid would be foolish, and the ramifications for state wildlife departments dangerous. Going down this road would require the IRS to approach the argument that the value is in the quarry itself. Which means the dead animal is the only thing you're getting for the auction bid. This would force an overturn of centuries of policy that wild game is property of the state and has no inherent commercial value. If a taxpayer were to lose this argument it would open the door for all states to be forced to sell all tags to the highest bidder in order to provide maximum benefit to the state.

If it were me, and hopefully in the next couple of years it will be, I would buy the tag and write off 100% of the auction price net of any license and tags fees included depending on the state. I believe if you were audited on this matter you'd have the states attorneys general of all of the western states, as well as countless conservation organizations, clamoring to provide your defense for you. These auction tags can be proven, scientifically, to have provided massive benefits to wildlife habitat, distribution, and hunting opportunity. That is the value, and it is intangible, a dead elk or sheep is, and always should be, considered worthless is terms of currency.
 
I'll posit a question on FMV. If I spend $300k on the Montana Governors sheep tag and promptly go kill a sheep in a unlimited unit, what was the FMV?
 
mossback.com/home/utah/

Man I hope you just have a cold.

But Doyle's page talks about different options.
 
I’m dead serious. Think about the ramifications for draw hunts if the market value were to be determined by the auction price.

A friend won an suv and a boat in a charity raffle last year. Had to pay income tax on the package. Proceeded to sell both to do so.

If you take the position that the market value of a Montana sheep tag is 300k then if you draw the tag you’d owe income tax on 300k-cost of tag and draw entry.

This is a dangerous interpretation for hunting as a whole.
 
I think the point a lot of you are missing is that the money is going to a charitable 503C Org. You are purchasing the voucher with the intent that the money is going to charity. That makes the whole donation a write off.

I am in agreement with Founder on this one.
 
This has been a great 'debate'. The good news is that after six months of treatment and six months of recovery I am feeling pretty dam good. I drew a great antelope tag and an Oryx tag so I did not buy a tag but I suspect I will at some point. I have enough points for a good elk hunt in Wyoming this year plus hope to draw one other tag (either family member or me) somewhere. It would be interesting to hear from someone that bought a tag and was audited.
 
Iowan said:
This has been a great 'debate'. The good news is that after six months of treatment and six months of recovery I am feeling pretty dam good. I drew a great antelope tag and an Oryx tag so I did not buy a tag but I suspect I will at some point. I have enough points for a good elk hunt in Wyoming this year plus hope to draw one other tag (either family member or me) somewhere. It would be interesting to hear from someone that bought a tag and was audited.
Click to expand...


I didn't even realize this was a year old post.

Good to hear you are doing well Iowan. That is awesome news.
 

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