Donating bitcoins - tax implications & deductions

Stephen Gornick

legendary

Activity: 2506

Merit: 1010

Quote from: CobaltBlueD on August 25, 2013, 04:32:01 PM

Assuming you are worried about the write-off, I see two issues. BTC is more anonymous than the government would prefer.

Charities accept cash and Bitcoin should actually be more desirable as it is a payment method that offers a form of triple entry accounting. Triple entry is the most transparent method for bookeeping that other ledger systems for charities should emulate!

- http://iang.org/papers/triple_entry.html

CobaltBlueD

newbie

Activity: 19

Merit: 0

I love the idea of the donating via BTC. Assuming you are worried about the write-off, I see two issues. BTC is more anonymous than the government would prefer. Demonstrating you donated BTC has some inherent difficulties (at least with the US IRS). The other item, I'm not sure how many flags I want to flag for the IRS. Being audited is no fun. Trying to explain BTC to the auditor would be quite a chore.

chris200x9

legendary

Activity: 1316

Merit: 1011

I think it's best to cash out and donate cash, I mean unless you declare your bitcoin as income. How would it look to get audited and be like "Oh this donation is legit I did it with bitcoin though even though nowhere do I report my bitcoin earnings."

keystroke

hero member

Activity: 900

Merit: 1014

advocate of a cryptographic attack on the globe

When donating to a charity does it make tax sense to sell the coins first and donate cash? Or donate BTC directly? Anyone know how this works w/ deductions?

It seems like EFF says BTC can be donated like a stock.

"You can now give Bitcoins to EFF in the same way that you can give stock. EFF has long had a policy that converts gifts of stock and items like cars into cash immediately on receipt. We try to convert your donations into action as soon as possible."

Then again if you cash out - long term capital gains rates are 0% in certain income brackets.

Topic: Donating bitcoins - tax implications & deductions (Read 2592 times)