Or is it?
As recently reported in The Wall Street Journal, the winning bid in the annual auction for a Power Lunch with billionaire investor Warren Buffett was $2.7 million. For the last 18 years, Buffett has annually auctioned off his time to raise funds for the San Francisco charity GLIDE, which provides food, healthcare and other services to the homeless and low-income population.
But when it comes to tax deductions, what part of the amount paid for this lunch can be claimed as a charitable gift? And who is the donor? Warren Buffett, the bidder or both? If it is the IRS’s position that the value of any benefit received by a donor in exchange for a gift must be subtracted for tax purposes, how would the donor determine the benefit of a meal with Warren Buffett?
Is there discernable value to having the billionaire’s ear over lunch? Has the value of lunch with Warren Buffett been set by the long-standing auction market and thus the deduction is reduced by the entire amount of the gift? Or would the bidder simply subtract the value of the meal and any travel included?
For more on a related matter, see the blog post “Gala Dinners—Two Important Tax Issues” from October 2015. ■