Fair Market Value Overview and FAQ's

Use this best practice to help guide you through setting FMV (fair market value). 

A few things about FMV:

• No matter what the item is, if it is being auctioned and is expected to receive bids, it has an FMV.  The auction is a market, and a winning bidder is proof that the item had some value.

• In order for a bidder to claim a tax deduction on an auction purchase, they need to have known when they placed their bid that they were being charitable, i.e. that their bid exceeded the FMV. This means that the FMV needs to be displayed somewhere for the bidder to be able to see it. (IRS Charity Auctions ) 

• The purchase of a raffle ticket or other game of chance is not a charitable contribution and is not tax-deductible. 

What if I want the full amount of the winning bid to be ‘paid over FMV’?

• In items > Manage Items, set the FMV of the item $.01. 

• Even, for example, 'principal for the day’ would probably sell every day at that school for a given price, so what is that price? If you really want the full amount of the purchase to be considered to be ‘paid over FMV’, entering $.01 is the solution to this.  You're giving your purchaser 99%+ of the value on their receipt.

• Do not mark the value as Priceless if you want a full amount of the purchase to be considered to be ‘paid over FMV’. Priceless on the receipts will have $0 paid over FMV.

  • For any item type other than donation, a $0 FMV will be treated the same as priceless with $0 paid over FMV.

  • If an item is truly considered priceless, then the winning bid in an auction sets the current FMV of that item. It has a value equal to the winning bid, and so $0 was paid over FMV.

FMV on Quantity Items (ie. raffle tickets, t-shirts, set price items):

• If you are only selling a single item of something (ie: ornaments) you can add a market value that is different from the price. 

  • For example, if you sell one ornament for $10 but its market value is only $5, and you offer purchase options like 2 for $20 or 3 for $30, the market value will be applied to the quantity purchased. So, if someone buys three ornaments, the fair market value would be $15.

• If you start selling something at different price/quantity combos like 1 for $10, 3 for $20, the system will default the market value to the price; it is no longer optional or adjustable.

  • Typically the reason to sell with pricing like this is that it's a raffle ticket or something similar, and there's not going to be the opportunity to pay over FMV for those (games of chance are not eligible to be considered a donation). 

• If you are selling a raffle ticket, the FMV should be the price of one ticket.  

  • Do not use the value of the prize as the FMV for a ticket!

Priceless FMV:

• For Silent, Live, Quantity, and Blind Item types there is now a 'Display as Priceless' toggle. 

• Under Items > Manage Items, when adding a new item this box will not be checked. Check the box or enter 0 if you want this item to display as priceless.

• When uploading the Import item template if the column H (FMV) field is left blank or 0, no FMV will show on the landing page, bidding site, display cards, bid sheets, or share links.

• If an FMV is entered but you choose to have the FMV show as Priceless the areas it will show as priceless are Item Share link, Auction Preview, Bidding Site, Display Cards, and Bid Sheets.

• Email/Print Statements, bidder receipts, Reports bidder statements & Paid Bidder statements will still show the FMV entered. If no FMV is entered then the statements will show Priceless.

• Items with FMV=Priceless will have $0 paid over FMV on receipts/statements. 

• You are able to adjust the FMV of an item after the item has sold. If you do change the FMV after an item has been paid, you will need to reissue a receipt for your bidder to have correct information about amounts paid over FMV.

• In order for a bidder to claim a tax deduction on an auction purchase, they need to have known when they placed their bid that they were being charitable, i.e. that their bid exceeded the FMV.  This means that the FMV needs to be displayed somewhere for the bidder to be able to see it.  If you use 'Priceless' as a FMV, the amount paid over FMV that will appear on bidder statements is $0.00. This is because typically 'Priceless' items mean you cannot put a value amount on an item, also meaning no value, or 0.   Priceless FMV does not have any tax write off ability.  

$0 FMV For Silent, Quantity, Live, and Blind Items: 

• If FMV is entered as $0, FMV will display as priceless on the auction preview, bidding site, and receipts. 

• For these items, receipts/statements will show $0 paid over FMV. 

• For Donation items, however, the FMV will always be $0 with full amount paid over FMV.

Why is my receipt showing admin fees as paid over FMV:

• An admin fee can be configured by the organization hosting the event to be applied to credit card transactions.  This admin fee is usually to help the organization cover the costs associated with processing credit card transactions.  When a bidder pays the admin fee associated with their transaction, this is treated as a donation to the  organization. The FMV for the fees is $0 and the entire amount paid is over FMV.

Calculating Fair Market Value:

This is the price for which you could sell an item to a willing buyer when neither of you HAS to sell or buy, and both of you know all the relevant facts.

• Market value generally refers to the amount a "typical" or "reasonable" buyer would pay for a given product in a competitive marketplace. You may not know the exact value of a particular good at a specific date and time, but prices that closely align with what the market is willing to pay will suffice. 

FMV Item Donor & Item Winner Flow 

We need to ask the question to our item donors: How did you calculate the Fair Market Value?

• New tax rules in some areas are requiring NonProfits to ask how a Fair Market Value was calculated by the item donor.  The wording of the question and instructions for where to answer can be added to the landing page section in which the donation form is embedded.   

 

FMV displayed on Item Share Link

-Manage Items: Item Share Link will not show the FMV if the ‘Show fair market value on the landing page auction preview?’ under Software Settings>Auction Settings>FMV Settings is set to No.

Adding FMV to an Individual Ticket, Sponsorship, or Underwriting

• Go to Event Tickets > Modify Tickets, and click on the ticket/sponsorship/underwriting you are looking to add a FMV to. Then, under the Fair Market Value setting, type in the value.

How can I hide FMV on the ticket page?

• From the admin site, we do not currently offer the ability to hide FMV from the ticket page if entered. It is possible by using Custom CSS, you do have this ability. Please keep in mind that ClickBid Account Manager’s do not provide support on custom css and your organization takes full responsibility for any custom css entered in the admin.

How does the FMV Display on the Bidding Site for a bidder?

• When logged in as a bidder, the FMV is displayed under each item’s Bid/Info button.

 

Is there a way to re-issue a receipt with revised FMV?

• Yes, you can update the item's FMV under Items > Manage items. You can then resend a statement under Bidders > Manage Bidders.  Find the bidder and under the tags column, click the “eml stmt” tag. This will email a copy of the updated statement to each email address associated with that bidder.  If the bidder had more than one purchase and you want to resend a single receipt, use Event Central > Event Payments, find the specific Paid Checkout for the bidder and click the envelope icon to email that receipt to the addresses associated with that bidder.

What are the different FMV Settings?

• Show Fair Market Value within the preview? - This setting will turn on/off the FMV for the auction preview on the landing page. 

• Show Fair Market Value on Browse Page? - This setting will turn on/off the FMV when logged in to the bidding site and viewing items. 

• Show Fair Market Value on Receipts? - This setting will turn on/off the FMV for bidder receipts/statements. 

• These settings mentioned above can be adjusted from Software Settings > Auction Settings > FMV Settings.

FMV for Items when the taxable value is different

• This is to assist Administrators in calculating taxable values for grouped items when only a portion of the FMV is taxable.

• There must be a Sales Tax Value set up. Choose Software Settings > Auction Settings > Payment. Enter the Sales Tax as a whole number (10% would be 10, 6.5% would be 6.5). Additionally, the Tax Calculation has to be set to FMV.

  • Example: Three items are put together under one item number to create one package. A $300.00 FMV (Football Tickets - non-taxable), $100.00 FMV (Parking Pass - non-taxable), and $100.00 (Football Necklace - taxable). The Total FMV for this package is $500.00 however only $100.00 is taxable.

  • Formula

    • Taxable FMV / Total FMV = Portion of the Item that is taxed x Tax rate x 100

Credit items:

• Credit Amounts on the receipt will reflect both a negative credit amount and also a negative credit amount to the total over FMV.  The credit will only apply to line items with an amount over FMV.

FAQ’s:

Is there somewhere that I can see a running total of the market value of my items that are input and before we are open for bidding?

A great report to see all FMV is under Reports > Auction Overview

I'm noticing that some of my items were won at more than the starting bid but less than the FMV, why is that?

When the auction closes, the highest bidder wins that item even if it's under the FMV.  If you want the item to go for at least the FMV, you should set the starting price at that value and let the bidding go from there.

If a bid reaches the Buy It Now price, does the Buy It Now option automatically disappear or do I have to manually remove it ?

When someone uses the buy it now option it closes the item.

We recommend that the buy-now price be typically over Fair Market Value (FMV), usually 150-200% (we've seen events that lose money due to low Buy Now values).

It is possible for a bidder to bid over the buy-it-now values. If a person chooses a bid increment that is equal to or higher than the buy now price, then the buy now button automatically disappears and the bidder does not win the item for placing a regular bid for the buy now price.

It is also possible for a bidder to place a max bid above the buy now price. If the current bid is still below the buy now amount, setting the max bid does not make the buy now button disappear. If some clicks the buy now button, they will be informed that they have been outbid, the buy now button will be removed, and the max bidder will be the current high bidder.

I am working on thank you letters. For example, when I put the donor information in for FMV, I want to type "priceless" on some of them because there is not an actual value on something like an autographed photo. But when I type "priceless” on the donor information page (where the mailing address goes), it turns to the number 0.00. 0.00 is what shows up on the thank you letter as the FMV. It didn't do that for our last auction in 2020. Any way to get around it?

The only workaround for this right now, would be to edit those manually once you generate the letters.  When you click 'Generate Letters' you can then change the $0.00 to the word “Priceless” before printing. It does not save the changes after printing, so if you change it, then print it, it will show on the letter permanently. If you change it then close the window without printing, the changes are not saved.

Is there an advantage to showing FMV on the landing page or on bidder receipts? Do most organizations want their bidders to know the FMV?

Most organizations only show FMV on the bidder receipts for tax purposes. They do not show it on the Bidding site or Auction Preview because they believe it might hinder bidding once the FMV has been met (most auction professionals do not agree).  Some organizations choose to show the FMV on all sites.  Keep in mind that the bidder is supposed to be able to see the FMV somewhere before bidding if they want the ability to claim a charitable deduction if they pay over FMV.

How are the Hot Item/Good Deal tags calculated in regards to the FMV of an item?

The “Hot” item tag shows if there is a FMV set for the item, there are 10 or more bids on the item, and the winning bid is greater than or equal to 60% of the item's fair market value.

The “Good Deal” tag shows if there is a fair market value set for the item, there is a bid on the item, and the winning bid is less than 60% of the item's fair market value.

If you have set a FMV on your items, these tags are automatically generated by the system to encourage bidding.