Selling inherited property appraised at $258K to church. Asking $250K but church offers $200K cash and make tax deduction of the $50K - what tax benefit to me ?

[Carl]

There is no tax deduction. You're selling them the property for less than it's FMV. Since the inherited property is your personal property, there's nothing to deduct because you can't deduct losses on the sale of personal property.

[Opus 17]

If the church does give you a tax deduction receipt they are breaking the law and their treasurer needs some reeducation.

If this is your personal home, there's probably no advantage to selling the property to the church at less than the fair market rate, you would be better off selling the property privately and then giving them a cash donation. Unless they need this particular plot of land.

If this was land that you were holding as an investment, then selling it for less money means that you have less taxable profit. That is your tax deduction.

[Opus 17]

@Carl are you sure the taxpayer can't deduct the loss on schedule D? Doesn't it depend on their intent when they acquired the property? For example, If this was vacant land they inherited and are selling to the church for a new church expansion, or if this was a relatives home that they just inherited and are immediately selling as an investment, wouldn't that qualify for a deductible loss?

[SweetieJean]

What about a " Bargain Sale" to a charity?

[Carl]

If the property was not business property prior to the inheritance that won't fly.
If the property was not used by the recipient of the inheritance for business purposes, it won't fly.
If the recipient is calling it an investment, then they'll have to deal with short term gains/losses if sold within a year. I don't know this for a fact, but I would expect in this scenario they'd have a difficult time proving the investment side of inherited property. But then, I'm not claiming to be a tax expert on this either. Putting myself in the shoes of an IRS audit agent, it would sure look fishy to me.

[SweetieJean]

Why do you think it has to be a business property?

[SweetieJean]

<a rel="nofollow" target="_blank" href="http://www.pgdc.com/pgdc/bargain-sale-overlooked-and-under-used-gift-planning-arrangement">http://ww...>

[Carl]

I'm not. Did you see Opus 17's comment? That seems to insinuate "non-personal use" to me.

[SweetieJean · Accepted solution]

Bargain sales to charity. 

A bargain sale of property to a charitable organization is partly a sale or exchange and partly a charitable contribution. If a charitable deduction for the contribution is allowable, you must allocate your adjusted basis in the property between the part sold and the part contributed based on the fair market value of each. 

https://www.irs.gov/publications/p544

[rjs]

Pub 526 has instructions for calculating the amount of the charitable contribution.

<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p526#en_US_2016_publink1000229779">https://www.irs.gov/publications...>