Charles H. Browning, Jr., and Patricia L. Browning - Page 17

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          must be subtracted from that figure to determine properly the               
          amount of the charitable contribution.2                                     
          IV.  Analysis of the Fair Market Value of the Easement                      
               A.  Introduction                                                       
               A bargain sale is a transfer of property that is in part a             
          sale or exchange and in part a gift.  See section 1.1001-1(e)(2)            
          Example (3), Income Tax Regs., which provides as follows:                   
               A transfers property to his son for $30,000.  Such                     
               property in A’s hands has an adjusted basis of $30,000                 
               (and a fair market value of $60,000).  A has no gain                   
               and has made a gift of $30,000, the excess of $60,000,                 
               the fair market value, over the amount realized,                       
          Where the bargain sale is to a charitable organization, the gift            
          generally constitutes a charitable contribution.  See sec.                  

          2    It should be noted that, in making the alternative argument,           
          respondent does not rely on the following sentences of sec.                 
          1.170A-14(h)(3)(i), Income Tax Regs.:                                       
               If, as a result of the donation of a perpetual                         
               conservation restriction, the donor or a related person                
               receives, or can reasonably expect to receive,                         
               financial or economic benefits that are greater than                   
               those that will inure to the general public from the                   
               transfer, no deduction is allowable under this section.                
               However, if the donor or a related person receives, or                 
               can reasonably expect to receive, a financial or                       
               economic benefit that is substantial, but it is clearly                
               shown that the benefit is less than the amount of the                  
               transfer, then a deduction under this section is                       
               allowable for the excess of the amount transferred over                
               the amount of the financial or economic benefit                        
               received or reasonably expected to be received by the                  
               donor or the related person.  * * *                                    

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