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Cryptocurrencies like Bitcoin are a popular means of charitable donating. Many investors appreciate cryptocurrencies, and their growth potential is significant. As with other kinds of non-cash-based donations, the best way to show your support is to provide assets that appreciate highly.

 

Before you make a Bitcoin donation, though, you need to ensure that you’re compliant with IRS regulations and offering the charities what they need. When planning your donation, it’s important not to forget the appraisal requirement.

 

If you make a non-cash donation, you need to provide substantiation to the IRS. That includes cryptocurrencies. Many virtual currency donors aren’t aware of this requirement, and complying with the requirements can cause deep concern.

 

The rule applies to anyone who claims more than 500 dollars of deductions based on their noncash donations. You must fill out Form 8283 if you’re making a high enough deduction to exceed the threshold.

 

If the currency you donate has a value of more than $5,000, the IRS must receive a qualified appraisal for you to claim your deductions. The only exception is for when you donate public stocks. However, the IRS doesn’t consider cryptocurrency to fall under the public stocks banner.

 

The public stock exception is outlined in Publication 561. The wording indicates that the only assets that apply are stocks with daily publicly published prices, which cryptocurrencies are not.

 

There is another exception outlined for public securities. However, the legal area regarding cryptocurrency and public securities is relatively gray. The problem is that there are many exchange rates for cryptocurrency, and it can be challenging to know which one to use. What data needs to be excluded? What timezone should you be using to mark your 24-hour daily cycle?

 

Because of these uncertainties, cryptocurrencies also are unlikely to be given an exemption to an official IRS appraisal based on their claimed status as public securities.

 

If you plan to donate more than $5,000 worth of cryptocurrency to any charity, you must make arrangements to have the donation appraised. A qualified appraiser can create an appraisal that covers specific data outlined by the IRS.

 

It can be hard to get cryptocurrencies appraised because appraisers must have a significant background in it already. Since it’s a relatively new type of asset, experts are rare.