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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7527
Experience:  15years with H & R Block. Divisional leader, Instructor
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We own a property that a 501(c)3 want to purchase. County

Resolved Question:

We own a property that a 501(c)3 want to purchase. County assessed value is $200K.
Can we sell the property for $80k and ask the non-profit to give documentation that
the difference of $120k as a donation. Will irs allow the assessed value as THE value
for donation? If allowable can one deduct the donated amount in increments over a
number of years or is it a one time deduction for that year of donation.
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D :

Hello and thank you for using Just Answer,


A bargain sale of real estate occurs when a person makes a contribution to a public charity by selling the charity property at a price that is intentionally set below its fair market value. The donation is equal to the amount by which the property’s fair market value exceeds the bargain sale price paid by the 501(c)(3) organization. See I.R.C. § 170(e)(1) & (2). A bargain sale also occurs if the nonprofit assumes an existing mortgage on the property and the mortgage assumed plus any amount paid by the nonprofit is less than the fair market value of the property. The amount of the mortgage is treated as part of the sales price of the property.


A nonprofit must provide a written acknowledgment for each donation of real property. The written acknowledgment should contain: 1) the name of the charity; 2) a description of the real estate donated; 3) the date and location of the contribution; and 4) a statement about what, if any, goods or services were provided by the charity to the contributor in return for the contribution. See I.R.C. § 170(f)(8) & (17); Treas. Reg. § 1.170A-13(a)(1) and (b)(1).




Robin D :

The donation is claimed in the year of the sale.

Robin D :

My goal is to provide you with excellent service today. If there’s anything else I can do, let me know – it’s been a pleasure working with you and I hope to assist you again soon!

Robin D :

I can change to Regular Q&A if you are having difficulty viewing the post.

Customer:

is fair market value usually justified and accepted by irs by assessed value by the municipal govt in

Robin D :

Fair market value would be whatever you could get for the property if you had it on the open market. An assessment/appraisal should be obtained. The donation is equal to the amount by which the property’s fair market value exceeds the bargain sale price paid by the 501(c)(3) organization.

Customer:

in your experience will irs accept the assessed value by the county government as fair market value?

Robin D :

Yes if it is a current assessment (with in the year).

Customer:

thanks

Robin D :

Your positive rating is always thanks enough.

Robin D :

Do not forget to report the sale as well on Schedule D. Thanks again

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7527
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 7 other Tax Specialists are ready to help you
Expert:  Robin D. replied 1 year ago.
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