bargain sale

A part gift/part sale transaction; within the context of charitable giving, a strategy where property is sold to a charity at a price below fair market value. The difference between the sale price and the fair market value is the amount of the charitable income and gift tax deduction available to the seller/donor. Assuming the property has appreciated in value, the seller/donor must pro-rate his or her basis to determine gain, according to the relative fair market values of the sale and gift portions.