Donating Cryptocurrency and Avoiding Traps for the Unwary

Overview

As the digital asset market continues to mature, more taxpayers may be contemplating blessing their favorite charitable organizations with gifts of cryptocurrency.  Beneficiaries unfamiliar with digital assets may find it challenging to properly report any of these types of donations.  Likewise, taxpayers will need to ensure that they properly value and substantiate any contributions or potentially risk their charitable deductions being denied. This course will provide a brief overview of digital assets.  This will be followed by a discussion of the rules regarding the documentation required when claiming a charitable contribution of digital assets.  This course will also cover recent IRS publications and cases discussing taxpayers whose deductions of digital assets charitable gifts were scrutinized.

**Please Note:  If you need credit reported to the IRS for this IRS approved program, please download the IRS CE request form on the Course Materials Tab and submit to kori.herrera@acpen.com.

 

Prerequisites

None

Objectives

• Discuss what constitutes digital assets

• Determine the differences between cryptocurrency and NFTs

• Be able to identify the IRS forms needed to report digital asset contributions

• Understand how to properly establish the value of the contribution

• Know the differences in required substantiation based on the amount of the contribution

• Understand the latest rulings by the Treasury Department and courts on these contributions

Highlights

• Differences between cryptocurrency and non-fungible tokens (NFTs)

• IRS Notice 2014-12

• Tax implications of contributing digital assets

• Gift tax rules for donating, gifting or bequeathing cryptocurrency and NFTs

• Substantiating charitable contributions of digital assets

• Traps for the unwary