A Money-Losing Golf Course (or Any Property) and an IRS Tax Situation. Two Problems Solved at Once
There is a way for an otherwise successful entity to sell off a money-losing golf course or property and benefit by way of an IRS Section 170 Bargain Sale. If you or your company is tired of pouring money down the drain, this can be a fairly quick and economic strategy to stop the bleeding.
Sell the problem property by way of an IRS Section 170 Bargain Sale. (See the two items that must be in place for a Bargain Sale below).
Understanding the 170 Bargain Sale, Compliments of Welfont Group, https://welfont.com/understanding-the-170-exchange/:
"Understanding the 170 Exchange can be a real challenge to the participants of a commercial real estate transaction. An Internal Revenue Code (IRC) 170 Bargain Sale is a purchase of Real Property by a registered 501 (3) C Tax Exempt Corporation. It's an IRS approved method that allows the seller to receive not only cash at closing but also a sizeable charitable tax deduction. A 170 exchange transaction basically combines the cash benefits of a traditional transaction with the tax-deductible benefits of a charitable donation. This allows the company to both receive capital for the property sold, as well as a charitable contribution tax deduction. Additionally, the donor receives the cash refunds as tax-free.
Successful commercial real estate investors use the Bargain Sale as a tax strategy. This strategy encourages philanthropy among profitable companies. This is accomplished by first understanding the 170 Bargain Sale and then rewarding companies who sell commercial properties to charitable organizations for below fair market value while reducing their tax burden."
BTW: This strategy can be used to dispose of any 'problem' properties such as:
- Money Draining Golf Courses
- Stalled Development Land
- Partially Constructed Office Building, Condominium, or Apartment Complex
- Strip Malls
Here are the two items that make the IRS Section 170 strategy viable:
- Property owner must have an IRS tax issue from earnings from other activities
- The 'problem' property must be able to be sold and delivered free and clear
Time to close a Bargain Sale can be as quickly as 45-days, provided all the 'ducks' are timely in order.
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