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Bargain Sale as Charitable Gift

August 19, 2011

Bargain Sale as Charitable Gift

 Definition

A bargain sale is a sale of property to charity at a bargain price; that is, for less than the property’s fair market value. The tax code treats a bargain sale to charity as if it consists of two separate transactions: a sale and a charitable contribution.
Prerequisites

  • A desire to donate to charity
  • An asset to sell to charity

Key Strengths

  • Provides income tax deduction
  • Allows you to recover all or part of your original investment in an asset
  • Minimizes out-of-pocket cost of a charitable contribution
  • Reduces potential federal estate tax liability

Key Tradeoffs

  • Requires irrevocable commitment
  • Requires you to pay income tax on your share of the bargain sale asset’s appreciation

Variations from State to State

  • None

How Is It Implemented?

  • Select a charity
  • Select an asset to sell to charity
  • Document your intent to make a gift
  • Report any gain on your income tax return

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

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