A “bargain sale” (or “charitable sale”) is the term used by the Internal Revenue Service to describe a sale of land, or interest in land such as a conservation restriction, for less than fair market value to a land trust when the land is to be used for a public purpose, including conservation or recreation. Technically, in a bargain sale, a portion of the value of the land is sold and a portion is donated. The relative proportions of the sale and the donation are determined through negotiation between the land trust and landowner. The landowner is able to take a charitable deduction determined by the difference between the sales price and the appraised fair market value on his or her income tax return under Section 170 of the Internal Revenue Code, resulting in tax savings.
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