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  • 1.  Bargain Sale Process

    Posted 03-09-2023 12:55 PM
      |   view attached
    Hi all:

    We have a donor selling us their property with the intention of taking the difference between the sale price and the FMV as charitable contribution. I believe this is a Bargain Sale? 

    From the charitable organization buying the property's perspective, what all do we need to do? Appreciate any and all insights regarding the process from pre-purchase to post-receipting. 

    Many thanks!
    Melissa

    --
    MELISSA TAN (she/they)
    Associate Director of Advancement Services

    Office of Institutional Advancement
    801 National Road West
    Richmond, Indiana 47374
    Office: 765-983-1634
    Email: tanme@earlham.edu
    Website: earlham.edu/CampaignForGood






  • 2.  RE: Bargain Sale Process

    Posted 03-09-2023 01:13 PM
    When you say "property," do you mean real estate - or personal property?

    If real estate, that can be very complicated and result in unintended consequences regarding taxes and property values. I would not do anything without your counsel first working with the donor's agent and attorney.

    The process is straightforward if this is something else, like a piece of equipment. The seller prepares an invoice reflecting the full retail value of the property. The seller's invoice includes a line indicating something like, "Less a charitable donation of $N,NNN."

    The "less" amount is treated as a bargain sale as described in IRS Publication 526. Your receipt would reference only the bargain sale amount (not the full value) and that the donation was a bargain sale. Also, internally, the bargain sale amount is recorded as a gift-in-kind.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987




    Original Message


  • 3.  RE: Bargain Sale Process

    Posted 03-09-2023 01:20 PM
      |   view attached
    Unfortunately, I did mean for property to be real estate in this case... What key points should be considered if all parties decide to go through with the transaction, and how those might affect both the seller and buyer?

    --
    MELISSA TAN (she/they)
    Associate Director of Advancement Services

    Office of Institutional Advancement
    801 National Road West
    Richmond, Indiana 47374
    Office: 765-983-1634
    Email: tanme@earlham.edu
    Website: earlham.edu/CampaignForGood



    Original Message


  • 4.  RE: Bargain Sale Process

    Posted 03-09-2023 01:25 PM
    These are questions for a real estate attorney.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


  • 5.  RE: Bargain Sale Process

    Posted 03-09-2023 01:29 PM
    Here's some info to ponder - but you really need an attorney working on this - and the donor needs their own attorney. You cannot give the donor any legal advice.


    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


  • 6.  RE: Bargain Sale Process

    Posted 03-09-2023 03:06 PM
      |   view attached
    I will certainly relay this back to the team. Thanks for the much needed advice, John! 

    --
    MELISSA TAN (she/they)
    Associate Director of Advancement Services

    Office of Institutional Advancement
    801 National Road West
    Richmond, Indiana 47374
    Office: 765-983-1634
    Email: tanme@earlham.edu
    Website: earlham.edu/CampaignForGood



    Original Message


  • 7.  RE: Bargain Sale Process

    Posted 04-17-2023 08:51 AM

    I have a question in regards to recording the bargain sale in the system.  Does it have to be recorded?  Leadership does not want to record in kind gifts in the system.  Are there any guidelines that we have to record it?



    ------------------------------
    Karen Dreessen
    Morningside University
    dreessen@morningside.edu
    ------------------------------

    Original Message


  • 8.  RE: Bargain Sale Process

    Posted 04-17-2023 08:58 AM
    You should always record, report, and count truly philanthropic gifts in the fundraising CRM (see the CASE Standards). These are also included in the annual VSE survey.

    Whether they are "booked" on the GL is another matter. Many institutions do not record 100% of GIKs there - especially if they are for unrelated purposes or under $5,000.

    I cannot imagine why a fundraising program would not want to recognize GIKs in its fundraising totals.  I get not recording services and partial interests. But not others.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


  • 9.  RE: Bargain Sale Process

    Posted 04-17-2023 09:26 AM

    In-kind gifts, other than stock, have not always been recorded in the past, just acknowledged.  Our university is at a turning point.  We have a new President, a new Advancement V.P., starting the process for a new ERP and also getting ready to start a new campaign; now would be the best time to revisit those policies.

     

    Thanks, John!

     

    Karen Dreessen

    Advancement Services Manager

    _____

     

    Morningside University

    1501 Morningside Ave. Sioux City, IA 51106

    o: 712-274-5107 | morningside.edu

     

    The Morningside University experience cultivates a passion for lifelong learning and a dedication to ethical leadership and civic responsibility.

     




    Original Message


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