Donor's Cost

• Donors to silent auctions cannot deduct the entire value of their donations as of June 2011, according to the University of Vermont. Instead, the donor may deduct the amount he paid for the item as a charitable contribution. For example, if a donor provides a CD player for a silent auction that he paid $25 for, he may deduct $25 as a charitable deduction even if, after appraisal, the winner of the auction discovers the CD player was worth $75.
  
  

Overpayment

• Winners of silent auctions may deduct a portion of their payments as charitable contributions if they pay more than the fair market value for the item. For example, if a winner bids $200 for a CD player with a fair market value of $75, the winner may deduct $125 as a charitable contribution. However, the winner must prove that she knew she was overpaying for the item. For example, she could show a catalog page from the auction listing the CD player as worth only $75 or a receipt from a similar CD player that she bought prior to the auction.
  
  

Services

• If a business donates services to a silent auction, these are not tax deductible. For example, if a hair salon provides a gift card allowing the winner to get a free haircut, the salon owner cannot deduct the cost of the haircut as a charitable donation. This rule supports the rule of deducting only your costs for the item; the hair salon owner did not pay anything for the haircut and, therefore, cannot deduct anything.
  
  

Considerations

• Although the rules for silent auction tax deductions are fairly straightforward, there is still room for confusion. For example, donors can deduct the full value of their goods if the goods were put to a "related use." Thus, if the charitable contribution was to a charity that serves the same population and purpose as the donor charity, the entire value of the goods may be deductible, but it is not entirely clear whether this is so. Donors and recipients should save all receipts and consult a tax professional about their charitable deductions if they participate in silent auctions.