I have not been involved with the logistics of how we have handled auctions in the past but if we haven't used a licensed auctioneer we have probably been in violation for years.....

I'm sure saying that everyone attending the convention is a one day member may or may not cover the requirement if looked into.

It seems on a yearly basis there is no need if the proceeds go entirely to the charity no matter who the buyer is since it is not the focus of what we do and its once a year as mentioned by the chat.

I wonder if in all the years these questions were asked before. We may be asking about things that don't matter?

Also remember, this is the Chat AI answering, if we're really worried a Nevada lawyer or a Nevada CPA should be consulted if we are that worried. Seems we've been doing consignments and the auction for quite a while.

A bigger question may be what position we are in when giving donation receipts for peoples Tax purposes and if that affects us.
Short answer: The donor is responsible for the value they claim on their taxes — not the nonprofit (Casino Collectibles Association).

1. Who determines the value

Under IRS rules, when someone donates non-cash property (collectibles, artwork, casino memorabilia, etc.):

The donor must determine the fair market value (FMV) of the donated item.

The charity should not assign a dollar value in the receipt.

Fair market value means what a willing buyer would pay a willing seller on the date of the donation.

2. What the charity (your 501c3) should provide

The nonprofit normally only provides a donation acknowledgment letter that includes:

Name of the charity

Date of donation

Description of the item(s) donated

Statement whether the donor received anything in return

Example wording:

“Thank you for your donation of three vintage casino chips and one slot machine topper on June 10, 2026. No goods or services were provided in exchange for this contribution.”

The charity should not state a value.

3. Extra rules for high-value items

If the donor wants to deduct significant amounts:

Donation value IRS requirement
$250+ written acknowledgment from charity
$500+ donor files Form 8283
$5,000+ qualified appraisal required
$20,000+ (art/collectibles) appraisal attached to return

For donations over $5,000, the charity usually must sign Form 8283 confirming it received the item — but that signature does NOT certify the value.

4. If the IRS audits the deduction

The donor must defend the valuation, not the charity.

If the value is exaggerated, the IRS can:

reduce or deny the deduction

impose penalties on the donor.

✅ Simple rule for your organization

Donor determines value

Charity describes the item only

Charity signs Form 8283 if required (acknowledging receipt, not value)

The “related use rule” is very important for organizations like the Casino Collectibles Association, especially if donated items are auctioned shortly after donation.

It can significantly affect how much the donor is allowed to deduct.

1. What the “related use rule” means

For non-cash donations of property, the IRS allows a donor to deduct:

Fair Market Value (FMV) only if the charity uses the item in a way related to its mission.

If the use is not related to the charity’s purpose, the deduction may be limited to the donor’s cost basis instead of FMV.

Source: IRS Publication 526 and Form 8283 rules.

2. Example with collectibles

Your nonprofit focuses on casino collectibles, so examples might be:

vintage casino chips

slot machine parts

gaming memorabilia

casino signage

tokens or cards

Related use example

A donor gives a rare casino chip.

The charity:

adds it to a collection or display

uses it for education, research, or exhibition

Result:

donor can usually deduct full fair market value.

Unrelated use example

A donor gives the same chip.

The charity:

immediately sells it at auction for fundraising

Result:

IRS may limit the deduction to the donor’s original cost basis.

If the donor bought it for $200 but it’s worth $5,000, they may only deduct $200.

3. Why this rule exists

Congress created the rule to prevent donors from:

donating appreciated assets

claiming a large tax deduction

having the charity immediately sell the item

without the charity actually using it for its mission.

4. The 3-year IRS reporting rule

If a nonprofit claims the item was for related use, but later sells it:

If sold within 3 years, the charity must file Form 8282 with the IRS.

The donor is notified.

This alerts the IRS that the original deduction may need adjustment.

5. How charities handle auction donations

Many nonprofits avoid the issue by making it clear the donation is:

“Donated for fundraising purposes.”

In that case:

donors usually cannot claim FMV

deduction is limited to their cost basis

Many donors still donate because they support the cause.

6. What many collectible nonprofits do

Groups like museums or collector associations often separate donations into two categories:

Collection donations

kept in archives or displays

donors may claim FMV deduction

Auction donations

donated specifically for fundraising

donors claim basis deduction only

7. Practical advice for your organization

To avoid tax confusion:

Donation form should include:

item description

statement that value is determined by donor

statement whether item is for collection or fundraising auction

This protects the nonprofit.

✅ Key takeaway

Charity use Donor deduction
Item used in mission Fair Market Value
Item auctioned for fundraising Usually cost basis