This has become a popular tax saver for crypto investors.
Yes! This has become a popular tax saver for crypto investors. According to The Giving Block, an online platform for nonprofit organizations, there was a 583% increase in digital asset donations from 2020 to 2021. Donate Bitcoin or other forms of cryptocurrency that have appreciated in value. For federal income tax purposes, cryptocurrency is treated as property, which can provide favorable tax results. It’s like donating stock. As a result, you don’t pay any tax on the appreciation during the time you’ve owned the cryptocurrency, while the deductible amount is often based on the fair market value on the date of the donation—even if that’s its highest point. If you’ve held property, including cryptocurrency, long enough for it to qualify for long-term capital gain if you had sold it—your charitable deduction equals the property’s FMV. If the property wouldn’t qualify for long-term capital gain treatment on a disposition, your deduction is limited to your tax basis in the property—usually its original cost. This can change the way you give cryptocurrency to charity.