Donating cryptocurrency to a charitable organization

If you donate cryptocurrency directly to a qualified charitable organization (described under Section 170(c) of the IRS’ tax code), then you can potentially avoid capital gains tax liability and claim a charitable deduction on your tax return for the fair market value of your cryptocurrency at the date of donation.[1]

The IRS requires noncash donations over $500 in value to be reported on Form 8283 of your tax return. While this form does not require you to provide receipts or other records of your donations with this form, it’s important to maintain records in case the IRS requests evidence of your donations

The amount that can be deducted depends on how long you held the crypto for: a) If you owned cryptocurrency for more than 1 year at the time of donating it, your charitable deduction is equal to the FMV of the virtual currency at the time of the donation.

b) If you owned cryptocurrency for 1 year or less at the time of donating it, your charitable deduction is equal to the lesser of (1): your basis in the virtual currency, or (2): the virtual currency’s FMV at the time of the contribution.[2]

[1] I.R.S. Frequently Asked Questions on Virtual Currency Transactions. (Questions 34). https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions

[2] I.R.S. Frequently Asked Questions on Virtual Currency Transactions. (Question 35). https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions