Yesterday we received a donation of bent-wood train order hoops, salvaged from Niles Tower (where W.P. crosses the S.P.) before it was burned. They're age-darkened new old stock.

To better understand the value of this donation, and properly thank the donor, I'm wondering what they're worth. None are listed on eBay right now. Does anyone have a rough idea of their value?

Thanks! - Doug Debs
Niles Canyon Railway
cell 650-704-1487

Doug:

A hoop sold on eBay back on the 22nd of November for $103.50 (and shipping was over $50.00). I have seen them sell for for around $75-$90 and can't remember any selling for over $120. There seems to be long-handled models which are a little more desirable and short-handled which seem to sell for less.

I looked in my copy of Bill and Sue Knous' Railroadiana (2000 edition) and couldn't find a listing. Railroad Collectibles (4th edition, 1999) by Stanley Baker indicates on page 196 that a hoop "measuring 13"x18" having a 30" long straight handle with a metal clip at the hoop's joint for train orders" has(had) a value in 1999 of $45.

Hope this helps with the hoops.

sc 'doc' lewis

Of course you can't give the donor anything that looks like an appraisal, right?


Paul Krueger
Seattle, WA

If your group is a 501(c)(3), you can give them a tax letter for the appraised value of the item. For tax purposes, every donation has a monetary value. Where issues arise is generally how much the donated item is worth and how that value is determined.

I agree. You thank the donor for the donation and include a description of the item. It is up to the donor to justify the value for tax purposes. Normally our museum uses a deed of gift form to acknowledge donations of items like the hoops discussed here.

Wesley

In this case, the donor is a retired railroad employee, 80+ years old, not a railroadiana collector, and doesn't have e-mail access, so it's unrealistic to expect him to determine the Fair Market Value, or pay an appraiser to do so. The eBay info is exactly what the donor and recipient needed.

Thank you very much,
Doug Debs

Fraud is the driving force behind 99% of IRS's activities in the nonprofit sector. As one judge observed, "The forms 990 and 1023 are complex becuase citizens' creativities at defrauding the charity system are so complex." And of course, since it's an "arms race", it's also a fast-moving field.

IRS does NOT want charities appraising gifts on behalf of the customer. Edit: See here http://youtu.be/RSpFYuVY5K4?t=27m52s The "fraud" angle makes the reason obvious: it would (and DID) result in charities competing with each other to offer the biggest declared value (deduction). The apocryphal example was used-car donations: remember when every darn charity offered to tow away your old junk car, and promised you a full blue-book write-off? (the charities were reselling them into the commercial market, typically far under blue-book as most had serious defects.) Remember how suddenly BLAM that stopped*?

The upshot is that IRS said "Why are charities appraising things in the first place?" The taxpayer claims the value and is "on the hook" to prove it. The charity won't get nailed with penalties, the taxpayer will, so the buck stops with the taxpayer. He must show an appraisal that stands up to a "sniff test" by the auditor. A charity's appraisal is corrupt by nature.

If this differs from your long-established understanding, see "fast-moving field". IRS was forced to make an issue of it because of the blast advertising and sheer scale of the "donate your car, get blue-book" fraud.

So what does the charity do? Do not assess value - describe the item. Give a description with an eye toward helping the taxpayer justify his valuation at an audit. E.g. no dents, good interior, non-flood, good Carfax, low miles, diagnostic pass, smog pass, so he can say "See, blue book is a fair value."

Of course you as an individual can "help" him as a favor, but recognize that you as a charity are in conflict-of-interest to set appraised value, and it's him, not you who'll be paying the penalties if the auditor disagrees. I suppose you might say "Donor asked us to compare his donation to eBay item #123456789012, and based on the description we think they are comparable with these differences:____"

Watch out for eBay auctions, any clown can set any price, but it's only a representative value if it actually sells (e.g. "completed items", or "11 of 44 sold".)


* except: If the charity uses the car internally (staff car, meals on wheels) or for their primary program service (voc-ed, cars for indigent single moms), IRS is more flexible about valuation because there's never a commercial sale to establish value.

All good points, but for these small material donations from occasional donors, it might be worth looking at this paragraph from the IRS web site:

" 7. To claim a deduction for contributions of cash or property equaling $250 or more you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more. If your total deduction for all noncash contributions for the year is over $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return."

Source:
http://www.irs.gov/uac/Eight-Tips-for-Deducting-Charitable-Contributions

The donor needs a nice thank you letter that substantiates his claim that he did indeed donate an item. You can then also casually mention that the IRS does not require documentation for donations valued at less than $250. If the donor is smart enough to pick up on the fact that a $249 donation is much less hassle than one he values at $251, all well and good. If not, it's his problem, don't make it yours.

Staying out of the IRS regulations and getting back to the original question, I have seen used hoops (the bamboo #9 shape) and "Y" sticks of Northeastern origins go at Northeastern railroadiana auctions for the $50-75 range in years past. Therefore, if you have been given "new old stock," a $50-100 estimate is not out of the question.