Bargain Sale to Charity
The Tax Court has ruled that a bargain sale to a charity qualified for a charitable deduction. The taxpayer held the intent that a senior center be built out of the property. He sold it to the buyer for $2M. The property was valued at $4.1M. The IRS disagreed with 1) the intent (saying it was not present) and 2) the valuation of the property (being way too high).
The Tax Court ruled that there was:
1) Intent based on all the preparation and research. The research and preparation took place over the course of years. Professionals were employed and counsel given.
2) The appraised value was about 3.6M. The appraiser did its work and thoroughly established the value with careful considerations being made.
The rule here is nothing new. At the Center we have put together various charitable/part-sale transactions and have been successful. What is important is to have an appraisal done by a reputable firm that does excellent work. Also create evidence via written instruments to make it abundantly clear your intent was to in part donate the parcel.
By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors