bargain sale to a charitable organization

An arrangement that allows an individual to reduce tax liabilities by selling an asset to a charity at a price below its market value. For example, an individual might use this strategy to avoid paying capital gains tax on the sale of a vacation property. If the property was originally purchased for $300,000 and it is now worth $500,000, the owner could sell it to charity for $400,000 and avoid paying taxes on $100,000 of capital gain. An individual who wants to use this strategy must obtain an independent appraisal of the value of the property to be sold.