A Gift of Cryptocurrency

A charitable gift of cryptocurrency is treated similarly to a gift of appreciated stock, with the same potentially powerful tax benefits.

Cryptocurrency is a decentralized digital currency used by millions of people worldwide. If you are one of them, you may find that you own cryptocurrency that is currently worth much more than you paid for it. If so, and if you’ve held it for more than one year, giving cryptocurrency lets you make a big impact for a relatively low cost. Consider the double tax benefit:

• You may qualify for an immediate income tax charitable deduction for the full value of the cryptocurrency if you itemize. 
• You owe no capital gains tax on the appreciation. 

We will immediately convert your donated digital currency into cash and put it to immediate use in furthering our mission. It will be directed to the area of greatest need unless you specify a particular program or ministry you would like to support.

Tax notes

• Your gift of cryptocurrency held for more than one year may be deductible for up to 30% of your adjusted gross income. Any excess deduction can be carried over for up to five years.
• A gift of cryptocurrency over $5,000 requires an appraisal that must be reported on IRS Form 8283.

OPTION 2—funding a donor-advised fund with cryptocurrency

Another charitable option may be to transfer cryptocurrency to your donor-advised fund (DAF). Not all DAFs accept cryptocurrency, so confirm the viability of this approach before transferring any digital currency from your digital wallet to your account.

Evaluate the fit.

Cryptocurrency held for more than one year may be a particularly good gift option to consider if you:

• Own appreciated digital currency 
• Want to bypass the capital gains tax on the significant appreciation
• Want to take a federal charitable income tax deduction for the full amount of your gift

See how it works.

For the past few years, Liam has given us a check for $10,000. This year, he realizes that the cryptocurrency he purchased three years ago as an investment has significantly increased in value. He decides to give us digital currency worth $10,000 that he purchased for $1,000. If Liam itemizes, he may be eligible to take a deduction for the full $10,000, even though $9,000 of it has never been taxed. In his 37% tax bracket, the tax savings are substantial.

Consider your timing.

Donating major cryptocurrencies can be as fast as donating cash, meaning you could donate on December 31 and still qualify for a charitable deduction this year. For smaller, less liquid cryptocurrencies, please check with us first to see if we can accept your donation, meaning you should initiate the donation process earlier in December.

How can we serve you?

We can provide you and your advisors with the information you need to request a transfer from your cryptocurrency provider, including our legal name and account. We can also provide guidance on the valuation and substantiation requirements for a gift of cryptocurrency.