Donating Bitcoin and IRS form 8283

[odolvlobo]

I am thinking of donating more than $5000 worth of bitcoins to a charity and I am not clear about how to fill out IRS form 8283, especially the part where you must have the donation appraised.

Does anyone have any experience with this?

FYI, I want to donate the bitcoins directly rather than selling them first because I can avoid paying taxes on the donated bitcoins.

[dansus021]

I am thinking of donating more than $5000 worth of bitcoins to a charity and I am not clear about how to fill out form 8283, especially the part where you must have the donation appraised.

Does anyone have any experience with this?

FYI, I want to donate the bitcoins directly rather than selling them first because I can avoid paying taxes on the donated bitcoins.

Firstly i am not american netizen but im curious about this so in there when you want to donate you should fill out form  why you just deposited into their address anonymously just tell the charity owner

[odolvlobo]

Firstly i am not american netizen but im curious about this so in there when you want to donate you should fill out form   why you just deposited into their address anonymously just tell the charity owner

Donations to charities reduce your income tax in the U.S., so I can give more -- basically the amount plus all the taxes I would have had to pay.

For example,

Selling $5000 worth of bitcoins would cost me $500 in taxes, so only $4500 would be left for the charity. On the other hand, giving $6667 worth of bitcoins and deducting the donation from my income would save me $1667 in taxes, so my cost is still $5000. The difference is that all the money goes to the charity and none goes to the IRS.

[PrimeNumber7]

*not tax advice*

I understand that the appraised fair market value would be the price of bitcoin times the number of bitcoin you are donating.

My advice would be to contract with a tax professional who is familiar with your individual tax situation to help you fill out this form.

[odolvlobo]

*not tax advice*
I understand that the appraised fair market value would be the price of bitcoin times the number of bitcoin you are donating.
My advice would be to contract with a tax professional who is familiar with your individual tax situation to help you fill out this form.

If it were only that simple ...

Part I, Information on Donated Property

You must get a written appraisal from a qualified appraiser before completing Part I.

...

Part III, Declaration of Appraiser

If you had to get an appraisal, you must get it from a qualified appraiser. A qualified appraiser is an individual who meets all the following requirements as of the date the individual completes and signs the appraisal.
1. The individual either:
  a. Has earned a recognized appraiser designation from a generally recognized professional appraiser organization for demonstrated competency in valuing the type of property being appraised, or
  b. Has met certain minimum education requirements and has two or more years of experience in valuing the type of property being appraised. To meet the minimum education requirements the individual must have successfully completed professional or college-level coursework in valuing the type of property obtained from:
    i. a professional or college-level educational organization,
    ii. a generally recognized professional trade or appraiser organization that regularly offers educational programs, or
    iii. an employer as part of an employee apprenticeship or education program similar to professional or college-level courses.
2. The individual regularly prepares appraisals for which he or she is paid.
3. The appraiser makes a declaration in the appraisal that, because of his or her experience and education, he or she is qualified to make appraisals of the type of property being valued.
In addition, the appraiser must complete Part III of Form 8283. See section 170(f)(11)(E) and Regulations section 1.170A-16(d)(4) for details. ...

[PrimeNumber7]

*not tax advice*
I understand that the appraised fair market value would be the price of bitcoin times the number of bitcoin you are donating.
My advice would be to contract with a tax professional who is familiar with your individual tax situation to help you fill out this form.

If it were only that simple ...

<...>

The basis for my suggestion is as follows:

Section A. Include in Section A only the following items.
1. Items (or groups of similar items as defined later) for
which you claimed a deduction of more than $500 but not
more than $5,000 per item (or group of similar items).
2. The following items even if the claimed value was
more than $5,000 per item (or group of similar items):
a. Securities listed on an exchange in which
quotations are published daily,
b. Securities regularly traded in national or regional
over-the-counter markets for which published quotations
are available,

As mentioned previously, I would suggest contacting a tax professional with knowledge of your specific tax situation who can give you individualized tax advice.

It may come down to you having to file your taxes a certain way, and seeing how it plays out in court if there is no prior precedent.

I would be surprised if there is case law regarding donations of bitcoin.

[_Miracle]

Is there a difference in your acquisition cost to the value now? I'm wondering if they would require you to pay on the potential gain.
Taxes  became one of the reasons I don't transact as much as I did in the beginning.

[figmentofmyass]

I am thinking of donating more than $5000 worth of bitcoins to a charity and I am not clear about how to fill out IRS form 8283, especially the part where you must have the donation appraised.

Does anyone have any experience with this?

FYI, I want to donate the bitcoins directly rather than selling them first because I can avoid paying taxes on the donated bitcoins.

good thinking. this hadn't occurred to me as a way to reduce my tax liability when bitcoin goes to the moon next year.

i see 2 solutions. the first one is easy---donate $5000 or less worth and you can avoid using a qualified appraiser.

the second solution is to hire an appraiser who is familiar with cryptocurrency. i came across 2 such firms:
https://charitablesolutionsllc.com/virtual-currency-appraisals/
https://cryptoappraisers.com/

i'm curious how it works out. let us know what you end up doing.

[Harlot]

Hmm I read the instructions for filling out the form for 8283 and all I can say is Wow they really don't make any sense for cryptocurrency donations especially the ones that aren't labelled as security since only securities are exempted from the appraisal requirement. For me it is really dumb to get your Bitcoin's appraised by someone as the certain amount of Bitcoin you will be donating already has been valued by the global market which I think eliminates the need of an appraiser, maybe there is some kind of exemption we don't know about since I doubt this hasn't been a concern before.

[gmaxwell]

I am thinking of donating more than $5000 worth of bitcoins to a charity and I am not clear about how to fill out IRS form 8283, especially the part where you must have the donation appraised.
Does anyone have any experience with this?
FYI, I want to donate the bitcoins directly rather than selling them first because I can avoid paying taxes on the donated bitcoins.

I've done this.  You need an appraiser. E.g. https://cryptoappraisers.com/  (like ... maybe you can get away without one, but that seems ill advised.)

You can do it somewhat more efficiently if you're going to make many donations to do a large amount at once to a Donor Advised fund, e.g. Fidelity Chartable and then make further donations out of the trust-- because then you just have a single bitcoin donation.

It's also advantageous to make a larger amount of donations in the same tax year because you can't write off the donation while using the (now pretty large) standard deduction-- so it's better to donate all at once in one year, don't use the standard deduction in that year, and then in other years continue to use the standard deduction.

[odolvlobo]

I've done this.  You need an appraiser. E.g. https://cryptoappraisers.com/  (like ... maybe you can get away without one, but that seems ill advised.)

You can do it somewhat more efficiently if you're going to make many donations to do a large amount at once to a Donor Advised fund, e.g. Fidelity Chartable and then make further donations out of the trust-- because then you just have a single bitcoin donation.

It's also advantageous to make a larger amount of donations in the same tax year because you can't write off the donation while using the (now pretty large) standard deduction-- so it's better to donate all at once in one year, don't use the standard deduction in that year, and then in other years continue to use the standard deduction.

Thanks, Greg. That is helpful.

I was hoping to do it this year (meaning this week), but it looks I'm going to be too late because of the complexity of the process. Also, it really bothers me that the IRS requires me to pay someone a ridiculous amount of money to say that the donation is worth $X in their expert opinion, when all they did was copy down a number from coinmarketcap.

[figmentofmyass]

Also, it really bothers me that the IRS requires me to pay someone a ridiculous amount of money to say that the donation is worth $X in their expert opinion, when all they did was copy down a number from coinmarketcap.

$120 for a single donation (https://cryptoappraisers.com) isn't ridiculous---that's significantly less than 1 hour of billed time from a competent CPA. considering you're avoiding any capital gains taxes and also deducting the entire amount of the donation, $120 seems like an afterthought, especially if you're donating higher amounts.

gifting long term capital gain property = extremely lucrative tax breaks. if they just allowed large untaxed noncash donations without any documentation, that could be abused left and right, so they put the onus on the taxpayer to prove it.

[odolvlobo]

Also, it really bothers me that the IRS requires me to pay someone a ridiculous amount of money to say that the donation is worth $X in their expert opinion, when all they did was copy down a number from coinmarketcap.

$120 for a single donation (https://cryptoappraisers.com) isn't ridiculous---that's significantly less than 1 hour of billed time from a competent CPA. considering you're avoiding any capital gains taxes and also deducting the entire amount of the donation, $120 seems like an afterthought, especially if you're donating higher amounts.

gifting long term capital gain property = extremely lucrative tax breaks. if they just allowed large untaxed noncash donations without any documentation, that could be abused left and right, so they put the onus on the taxpayer to prove it.

While $120 won't break the bank, it is still ridiculous. It is a rent-seeking rate. The appraiser benefits from the regulation rather than any skill or expertise that they might have. You don't need an hour of a competent CPA's time to look up the price on coinmarketcap. Furthermore, a self-reported value cannot be abused because the IRS can easily check it.

Also, note that in the first link you provided, they charge $600. Thank goodness there is a "low-cost" alternative.

[Lorence.xD]

Only way I know how is the fiat kind of donation. Never had the experience to donate in bitcoin. Ask those that will be involved, like your accountant, financial adviser that should be a fiduciary, and a lawyer. Asking for this thing on the Internet is pretty risky because not everyone has the same experience.

[figmentofmyass]

$120 for a single donation (https://cryptoappraisers.com) isn't ridiculous---that's significantly less than 1 hour of billed time from a competent CPA. considering you're avoiding any capital gains taxes and also deducting the entire amount of the donation, $120 seems like an afterthought, especially if you're donating higher amounts.

gifting long term capital gain property = extremely lucrative tax breaks. if they just allowed large untaxed noncash donations without any documentation, that could be abused left and right, so they put the onus on the taxpayer to prove it.

While $120 won't break the bank, it is still ridiculous. It is a rent-seeking rate. The appraiser benefits from the regulation rather than any skill or expertise that they might have. You don't need an hour of a competent CPA's time to look up the price on coinmarketcap. Furthermore, a self-reported value cannot be abused because the IRS can easily check it.

i agree, and i reckon that's why there is an exemption for publicly listed securities. the regs obviously weren't written with bitcoin in mind. i'd like to think that exemption will eventually be expanded to include cryptocurrencies, though i wouldn't hold my breath.

considering the detail required on form 8283 and the legal liability they are taking on, i'm curious---what do you think a fair price would be?

[odolvlobo]

$120 for a single donation (https://cryptoappraisers.com) isn't ridiculous---that's significantly less than 1 hour of billed time from a competent CPA. considering you're avoiding any capital gains taxes and also deducting the entire amount of the donation, $120 seems like an afterthought, especially if you're donating higher amounts.
gifting long term capital gain property = extremely lucrative tax breaks. if they just allowed large untaxed noncash donations without any documentation, that could be abused left and right, so they put the onus on the taxpayer to prove it.

While $120 won't break the bank, it is still ridiculous. It is a rent-seeking rate. The appraiser benefits from the regulation rather than any skill or expertise that they might have. You don't need an hour of a competent CPA's time to look up the price on coinmarketcap. Furthermore, a self-reported value cannot be abused because the IRS can easily check it.

i agree, and i reckon that's why there is an exemption for publicly listed securities. the regs obviously weren't written with bitcoin in mind. i'd like to think that exemption will eventually be expanded to include cryptocurrencies, though i wouldn't hold my breath.
considering the detail required on form 8283 and the legal liability they are taking on, i'm curious---what do you think a fair price would be?

All they would have to do to fix it would be to extend the regulation from security to any property traded in a regulated market. There is no good reason for restricting it to a security.

If we assume that an independent appraisal is necessary, I think a fee similar to what is charged by a notary would be reasonable since the activity is similar. Notaries charge between $2 and $20.

[odolvlobo]

I've done this.  You need an appraiser. E.g. https://cryptoappraisers.com/  (like ... maybe you can get away without one, but that seems ill advised.)
You can do it somewhat more efficiently if you're going to make many donations to do a large amount at once to a Donor Advised fund, e.g. Fidelity Chartable and then make further donations out of the trust-- because then you just have a single bitcoin donation.

I set up an account at Fidelity Charitable and donated some bitcoins. That all went fairly smoothly, although it did involve some emails and phone calls. Then, I portioned out the funds from Fidelity's sale to a few charities. I paid $120 for the appraisal -- that was a legally-required waste of money. I got lucky and the bitcoins were sold at the the top, so the appraiser just used the sale price.