Donation of Cryptocurrency

[Lee B]

"If a taxpayer makes a charitable contribution of cryptocurrency valued at more than $5,000, a qualified appraisal is required the IRS held in Chief Counsel Advice 202302012.[1]  The IRS finds that cryptocurrency fails to fall into any category of property exempted from the qualified appraisal rules of §170(f)(11)(C)."

It doesn't get any easier, does it?

[Terry D EA]

No it doesn't. Crypto is considered property. The most difficult part is determining value. One would think the value is either FMV or owner basis at time of purchase, but not that simple. Add in forks, splits and other items to the mix. So, if I donated a bitcoin that my basis is $3000.00 to a charitable organization, is it safe to include this amount on the 8283? Can't be a cash donation because it is property. Like you said, it doesn't get any easier.

[Sara EA]

The really tricky part about valuing crypto is that the value changes by the second or nonosecond or something, and it trades 24/7.  No looking up the closing price like with funds, or averaging the day's opening and closing prices for stocks.  (One appraiser uses the average day's high and low of three crypto exchanges that exchange into dollars and then averages the averages--not sure if that cuts the mustard.)  I would put the onus on the donee to research the price when the  crypto left his/her wallet.  If over $5k, there are few "qualified" appraisers to sign the necessary paperwork, so good luck with that.  Few charities are equipped to take crypto anyway.  For those that do, the client could get help from them to determine FMV.  So yes, I am pretty much saying that it is NOT OUR PROBLEM to figure this out, other than making sure the client follows the rules (and explaining over and over that basis has nothing to do with it).

[Pacun]

I assume the appraiser will use this link below to know the FMV when the coin was donated. Let's say that you donated some solana SOL on April 15, 2022. You will enter SOL on the search bar, then you will click "all" and expand the chart and move the cursor to the date you are looking for.  In this case the FMV of each SOL was $101.3

https://coinmarketcap.com/gainers-losers/

[Sara EA]

I think you need the exact time.  As volatile as crypto is, it could have traded between $70 and $150 that day.  Bitcoin, for example, sometimes seems to be going up at 9AM but by 5PM is down over $400  (and there is no trading day so who knows where it was before 9 or where it will be by midnight).

[Pacun]

So, you have to have the appraiser with you each time you want to donate crypto? He is the one that will give faith to the price.

How about the passage that reads that you can deduct the amount that the "church" received when property was sold?

[Sara EA]

Only donations over $5k need an appraisal.  I think the amount the charity received in a sale only applies to cars, boats and airplanes.  Anyone ever had a client donate an airplane?