In the US, if you donate your cryptocurrency to an IRS-recognized tax-exempt public charity (e.g. 501(c)(3) organization), the IRS does not require you to pay capital gains on the transaction and you can deduct the value of your donation based on the fair market value of the cryptocurrency on the date of the donation.
Additionally, per the updated IRS guidance on cryptocurrency taxation, donating cryptocurrency to a charity will not trigger a capital gain or loss. If you are donating a crypto asset that you have held for more than one year, you are eligible for a deduction equal to the fair market value of the asset at the date of the donation. If you have held the asset for one year or less, you are still eligible for a deduction. However, it will be the lesser of the fair market value of the asset at the time of the donation and the cost basis of the asset.
In essence, this means that you may donate appreciated cryptocurrency assets to charities and bypass capital gains taxes.
For more information on the tax benefits of donating or gifting cryptocurrency, check out our blog post!
How do I tag a transaction as a donation?
You can tag a transaction as a Donation in CoinTracker by filtering the the specific transaction, selecting the
More actions option, followed by
Tag transaction and finally the
You can review our full guide on how to mark transactions with tags for more information.
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