Avoid U.S. Taxes on Bitcoin. Give to Charity.

[galbros]

This is standard advice and applies to any asset.  It is very popular with stock.  If you bought Apple stock 10 years ago for 50 USD a share and donate it to a 501c3 charity today you get to deducted it's current market value, ~600 USD, not your basis, 50 USD.

Thanks to the recent iRS ruling, bitcoin should be treated the same way.

The issue of what is a legitimate charity is a separate one, though it is common for wealthy people to set up personal foundations that are 501c3 organizations and there is no reason that someone with a lot of Bitcoins could not do something similar.

Good Luck!

[TheLittleDuke]

I would love if we had a wiki of charities that accepted bitcoin. I may make one when I'm ready to donate if one isn't already made.

It's essentially what we're trying to do with our free directory at https://doabitofgood.com/directory

Beyond that they can socialize their specific causes and solicit anonymous or named donations.  Why donate anonymously when you can take credit for it and get a receipt in the process??

[LostDutchman]

With all the moaning and complaining about the impact of the recent IRS statement on the tax-ability of bitcoin, most have overlooked one good outcome of this clarification. One that hopefully will unleash even more philanthropy in our bitcoin community.

Under current IRS guidance, dispositions (sales and spendings) of bitcoin are a taxable event. Bitcoin is property and when it's sold or spent, an individual must calculate the gain or loss on that transaction and report it as a capital gain or loss on his/her Federal Income Tax filing.

Except for this: Bitcoin that has been held for more than a year and gone up in value can be donated to a recognized charity without having to report any taxable gain to the IRS; what's more, one can take a deduction for its full market value at the time of donation. Donations of appreciated bitcoin held a year or less are still deductible, but their gains in value must also be recognized (and taxed).

This often overlooked fact turns a significant negative into a strong positive. Don't sell or spend profitable long-term holdings of bitcoin. Inasmuch as you can, donate them to charity and buy yourself a double tax break with your generosity.

There is a long section on Contributions of Property found here: http://www.irs.gov/publications/p526/ar02.html#en_US_2013_publink1000229703

Here you'll find more specific information in the sections Giving Property That Has Increased in Value -- Ordinary Income Property & Capital Gain Property: http://www.irs.gov/publications/p526/ar02.html#en_US_2013_publink1000229755

The IRS Guidance Summary is here: http://www.irs.gov/uac/Newsroom/IRS-Virtual-Currency-Guidance

Example: Let's say in 2014 you have taxable income of $100k and thus you were in a 25% marginal tax bracket; and you itemize deductions on Schedule A. You have $3000 worth bitcoin (present value) to sell/spend or donate; for those coins, you paid $1000 more than a year before.

If you sell or spend those bitcoin, you will pay $300-560 in Federal taxes ($2000 gain X 15-28%), depending on what tax rate is applied. And you might also pay state income taxes; at say 5%, that's another $100.

If you donate the $3000 worth of bitcoin to a charity, you pay no Federal or state tax, and you pick up a tax benefit of $750 in the Sch A deduction of $3000; that is, $3000 X 25%.

References: See what T. Rowe Price and Fidelity have to say about this strategy.
http://programforgiving.org/charitable/pages/donatingAppreciatedAssets.jsp
http://www.fidelitycharitable.org/giving-strategies/tax-estate-planning/appreciated-securities.shtml

Ok, so I do a bunch of work, spend a gazillion dollars to gain a ton of Bitcoins and then give them all away so I don't have to pay taxes?

Are you on drugs?

I think the point is that you can donate some of your bitcoins and then use that as a deductible to lower your taxes on whatever fiat you make, thereby 1) Doing a good deed and 2) Giving yourself a tax break on your 9-5'er income.

Sorry, Charlie!

ALL of my income is derived online.

I utilise proper business setups to minimise my taxes but do not have nearly enough money to engage in philanthropy.

There are very few Andrew Carnegie types in the crypto world.

there are very few carnegie types in the world, period. and if you are extremely wealthy, it is more likely that you are crude and don't give a fuck about others.. it's about climbing the ladder after all.

Horseshit.

Typical Looney/Leftie/"Liberal" comment.

[jc01480]

I have no intentions of paying a dime in taxes for anything related to BTC. 

[DannyElfman]

I have no intentions of paying a dime in taxes for anything related to BTC. 

well, stay off away from centralized services and stores accepting bitcoin in physical locations, and you should be okay. *not advice

LOL

[jeffersonairplane]

I though taxes went through on Bitcoin with charities. IRS is finding was to keep BTC under control but and won't stop

[LostDutchman]

I though taxes went through on Bitcoin with charities. IRS is finding was to keep BTC under control but and won't stop

Yep.

They haven't started yet.

[allgoodthings1]

The issue of what is a legitimate charity is a separate one, though it is common for wealthy people to set up personal foundations that are 501c3 organizations and there is no reason that someone with a lot of Bitcoins could not do something similar.

The beauty of this strategy is that it's in everyone's reach. You don't have to be rich enough to set up your own non-profit. Just find a qualified organization to give to -- any amount! -- and you're in business. As for "qualified institution", you can use this official tool to check out any U.S. organization:
EO Select Check http://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check

[jc01480]

I though taxes went through on Bitcoin with charities. IRS is finding was to keep BTC under control but and won't stop

Yep.

They haven't started yet.

They'll be looking for a new target since the tea-party gig is up.

[LostDutchman]

I though taxes went through on Bitcoin with charities. IRS is finding was to keep BTC under control but and won't stop

Yep.

They haven't started yet.

They'll be looking for a new target since the tea-party gig is up.

There may be truth to that!

[allgoodthings1]

WOW! This current rise in bitcoin price has turned me into a very generous person! Anyone else giving more to charities these days?

[ShakyhandsBTCer]

If you were to do this then you would give up an value that your coins previously had.

It would be more beneficial to sell your bitcoin for fiat and pay the 20% long term capital gains tax (plus the Obama care tax).

[LostDutchman]

If you were to do this then you would give up an value that your coins previously had.

It would be more beneficial to sell your bitcoin for fiat and pay the 20% long term capital gains tax (plus the Obama care tax).

"Obamacare"!

What a fucking joke put up by the Master Jokester!

You can also conceal your work, pay no taxes and walk away free of government control if you do it right!

Would you like to know more?

[Dignitas]

If you're looking for an amazing charity to donate to, check out Dignitas International. They put HIV+ mothers on treatment so their babies are born HIV free!

You can donate your bitcoin here and Canadians can get a valid CRA tax receipt: http://dignitasinternational.org/donate/bitcoin/

[keithers]

If you were to do this then you would give up an value that your coins previously had.

It would be more beneficial to sell your bitcoin for fiat and pay the 20% long term capital gains tax (plus the Obama care tax).

"Obamacare"!

What a fucking joke put up by the Master Jokester!

You can also conceal your work, pay no taxes and walk away free of government control if you do it right!

Would you like to know more?

Not really advisable if you ever plan on making real money.   If you are hiding an hourly wage that is one thing.   We are talking prison if you are caught hiding 6-7 figure annual income

[illymoka]

I agree that donating to charity is good.
However, this does not save me one bit of money.

[StatusSeeking]

I agree that donating to charity is good.
However, this does not save me one bit of money.

It may not save you money, but by donating, that money goes to a noble cause instead of going to a government cause... like spying on you, drone bombing weddings, and waterboarding people.

[mamarried]

I agree that donating to charity is good.
However, this does not save me one bit of money.

It may not save you money, but by donating, that money goes to a noble cause instead of going to a government cause... like spying on you, drone bombing weddings, and waterboarding people.

why do we automatically assume all charities are good? Many charities have done more harm for humanity than helped