What Is a Bargain Sale to𒁏 a Cha✨ritable Organization?

A bargain sale to a charitable organization is the sale of a good or service to a charitable organization for less than the fair market value of the good or service received. Donors often who wish to make a 澳洲幸运5开奖号码历史查询:charitable donation to an organization in🥃 a form other than cash often use bargain sa🦩les.

One very common example of a bargain sale to a charitable organization is th⛄e sale of real estate to a charity. In many cases, the property transferred is exchanged for other similar property of lesser value, and the difference is co💜nsidered a gift.

Unders𒊎tanding a Bargain Sale ✤to a Charitable Organization

If the property sold has 澳洲幸运5开奖号码历史查询:appreciated in value, the 澳洲幸运5开奖号码历史查询:cost basis must be divided proportionately between the portion of the property that is actually sold and the remainder that is donated. The gain on the portion of the property that is sold must then be reported as income. The donation portion is written off within the limits of charitable contributions for appreciated property.

A bargain sale transaction typically reduces the 澳洲幸运5开奖号码历史查询:tax liability of the donating party. The portion of the sale that is considered a gift is equal to the excess of the fair market value of the donated item over the price paid by the charitable organization. This differential “gift piece” is consequently a 澳洲幸运5开奖号码历史查询:tax-deductible charitable contribution.

Qualifications for a Bargain Sale to 🍸a Charitable Organizationꦇ

For a transaction to qualify for bargain sale treatment, the donor or seller must declare their intent to make a charitable gift before the transaction, and the transaction must produce a charitable contribution income tax deduction under the 澳洲幸运5开奖号码历史查询:Internal Revenue Code.

For example, a 🃏taxpayer sells their property to a charitable organization for $100,000, but at the time of the transaction, the fair market value of the property in question is $200,000, and $100,000 is the adjusted basis of the entire property. In this instance, the bargain sale rule would kick in because the price the charit﷽y paid was less than the fair market value.

Accordingly, the adjusted basis for determining the gain on the bargain sale is $50,000, which is determined by this calculation:

• $100,000 purchase price / $200,000 fair market value x $100,000 adjusted basis = adjusted basis for determining the gain

A number of variables could potentially affect the taxable outcome that results from making a bargain sale to a charitable organization, so it is advised that the donating party co🔯nsult a qua🤡lified tax preparer to make sure they achieve the dual mission of 澳洲幸运5开奖号码历史查询:providing a charity with a good or service whil🗹e obtainingꩲ favorable tax treatment.