Learn the Benefits of donating Cryptocurrency
Donating your winning cryptocurrency has advantages over simply donating dollars
When you donate cryptocurrency that has appreciated in value, you gain a significant tax advantage, and the charity likewise receives an advantage. The main advantage is that you don't realize capital gains, and the charity receives the donation at a better tax basis.
For example, say you bought a Bitcoin at $1,000 and it is now trading at $6,000. Say you wanted to make a gift to a charity. If you were to sell your Bitcoin, you would have a gain of $5,000, which would then be subject to capital gains taxes of somewhere between 15%-30%, (Variable depending on your tax bracket and state tax rate). Let's assume your capital gains tax is 15%- this would leave you with $5,250 to donate.
However, if you donated the Bitcoin directly, you would pay no taxes, and the charity would receive it at a tax basis of $6,000, rather than at your basis of $1,000- meaning that when they decide to sell it, they would pay taxes on only any gains above $6,000. In so doing, the charity would receive the full $6,000, rather than only $5,250. You would also receive a tax deduction for your donation.
Additionally, if you still liked Bitcoin as an investment, you would be free to turn around and buy another Bitcoin at $6,000, and that would be your new tax basis- again meaning that if you sold that Bitcoin later on, you would only pay tax on gains above $6,000.