Owner is about to go into bankruptcy and it was gifted to him by his mother.Can he owner finance it to us to keep it out of his bankruptcy so we can get it locked in until we are ready to pay in full next year?

Or find a friend that will loan you the down payment - and work the the seller - or if you have a job and credit and no job - use a loan program that allows gifted funds to close (owner occupy loan).

If that's what's going on, then I feel bad if I'm "looking a gift horse in the mouth". 

I’m doing an open house at a 1% rule duplex in Saint Paul tomorrow and giving away a $20 gift card to Roosters BBQ.

What's the best method of doing this to keep from capital gains from a gifted house and such?  

For you it's an adult gift.

If there’s something that affects how much money you have on hand that isn’t shown by simply looking at your salary, be prepared to document it.Explanation of any credit inquiriesSubstantiation of any large deposits or cash gifts that aren’t regular income.

Have you looked at the gift tax implications to such a structure, or the deductibility of interest payments?

Gift letter from parents.

I recommend to my clients that they help their family in ways other than co-signing - by gifting a down payment, helping with closing costs.