Entering Items for Wine Wall or Balloon Pop
To enter items for any "game" with a fixed price where each buyer receives a "prize" of varying value.
There are tax implications for how you decide to set up and sell Wine Wall or Balloon Pop items (which we express no opinion on). The three options are described and illustrated below.
1. Regardless of which method you choose, if you want to generate receipts and/or thank you letters to donors from the software, you need to create an item for each individual donation. These items can be entered as type = gift (or in kind) donations to record the donation and value without making them available for sale or viewing in the web catalog OR as type = sellable if you plan to record the sales.
2a. Create as a Raffle-type item, which provides no tax benefits to the buyers.
2b. Create as a Sellable-type item, with a FMV equal to the average value of the prizes. The difference between the price paid and FMV may be considered tax deductible to the buyers.
2c. Record the fixed price sale of the wine wall against the actual bottle "won" so overpaying may provide the buyer a tax deduction (and underpaying may create a tax liability). This is much more complicated than the alternatives and should only be done where the prizes have high value.
1. To track wine wall donations and thank donors, create an item for each prize:
Go to: Catalog > Add or Edit an Item
1. Select Donor record from dropdown so donation can be acknowledged.
2. Include "Prize" in the Item Name.
3. A single item record can be used for donations of more than one of an item.
4. Create a new item category, then select for easier tracking of prizes.
5. Use type = Sellable if you will be "selling" prize to winner, or type = Gift (in kind) if you do not need to record the sale.
6. Be sure to record the FMV (for quantity of one, if multiple)
7. Enter the price to pay to participate.
2a. To record sales with no tax benefit to buyers, Create and sell as a raffle type item:
Go to Catalog > Add an Item
1. Enter the Name of the "Game"
2. Enter the exact quantity available so it can't be oversold.
3. Type = Raffle
4. Price to play (which creates an matching FMV by default).
2b. To record sales with an averaged tax benefit to buyers, create and sell as a sellable type item:
Go to Catalog > Add an Item
1. Enter the Name of the "Game"
2. Enter the exact quantity available so it can't be oversold.
3. Type = Sellable
4. Enter FMV equal to average value of all prizes.
5. Price to buy.
2c. To record sales with the actual tax benefit/obligation to buyers, create unique items and record each specific transactions:
Sell at: Auction Night > Sell an Item
To sell each item, you must first enter an item for the prize (see below).