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Bargain Sales


Bargain sales are hybrid transactions that are part sale and part gift. In these transactions, a donor transfers property to a charitable organization and receives something in return, usually money, having less value than the property surrendered. This difference in value gives rise to a federal income and gift tax deduction.

The net tax benefit is generally not the full difference in the value received by the donor/seller and the value given by the charitable buyer. Since the transaction is part sale, the donor will recognize some gain from the sale portion of the transaction. This gain will be partially, fully, or more than fully offset by the charitable deduction.

This type of gift is appropriate for charitably inclined individuals who are willing to give up certain property, but who are unable to part with the property's full value. The organization may either sell the property or use it in the organization's charitable function. This type of transaction is particularly attractive to charitable organizations that need to acquire real property for expansion.

We have assisted both organizations and individual donors in structuring bargain sales and in computing the charitable contribution and gain recognized by the donor/seller.


©2008 Ronnie C. McClure, PhD, CPA