Donations Ethereum and Bitcoin: deduction and tax revenues
As an organization without taxes that volunteer in the United States, it is likely that you are familiar with the complexities of acceptance and elaboration of encryption of encryption gifts. One of the most common questions is whether these donations can be deductible from taxes and if welcome is needed.
donations deductible from taxes: understanding of bitcoin donations
In general, the donations made to the US tax organization are deductible from taxes pursuant to Atern Tax Act (IRC) 501 (C) (3). This means that donors can request a charity deduction for their tax return for their contributions to their qualified organizations. However, cryptocurrency donations are a relatively new and complex tax law.
Item 170 donations: traditional rule
In 2014, the IRS published the instructions (announced 2015-56), which clarified that article 170 (charity and gifts fund) applies to certain types of charity commissions, including cryptocurrency. Based on this rule, donors can reduce their cryptocurrency donation as a valid charity commission if they meet the special requirements:
- The assistant must be an organization without taxes.
- The donor should have kept the cryptocurrency at least 12 months before the donation was made.
- The donor must be built the deductions in module 1040 in the A.
Bitcoin donation rule: special aspects
The IRS is in response to the growing general interest and charity of the cryptocurrency and the publication of charity, which has provided further instructions (announcement 2019-41), which deals with the tax treatment of cryptocurrency donations. According to this rule:
- Assistants can reduce cryptocurrency donation as a qualified charity commission.
- The donor should have kept the encryption currency for at least a year before making the donation.
- The donor must maintain the accounting of the cryptocurrency, including its current market value.
RECEPTION
Although donors are not required to deliver the receipts to their cryptocurrency donations, your organization must provide documentation and recognition in different ways. Some options are:
- Rehabilitation letters : Send a letter or recognition to the donor to confirm their donation.
- Digital receipt : Create a digital receipt that can be shared with the donor via e -mail or online portal.
- Declaration of reduction of charity : include a declaration on form 8288 (no -Scash charity) that indicate that you have given a charity deduction at the cost of cryptocurrency.
Not being able to make receipt receipts
In accordance with the IRS settings, bankruptcy or documentation can lead to penalties, fines and audits. In addition, donors may not be able to request their donation as a qualified charity commission if they do not receive adequate recognition.
Best Practice to make Bitcoin donations: Passo-Passo guide
- Understand the organization’s policies : check the organization’s instructions for cryptocurrency donations to make sure to respect the IRS regulations.
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- Maintenance of record
: keeping careful and detailed registers by the cryptocurrency trade, including its current market value and all the documents presented to the assistant.
- Publication receipts : Create a receipt that contains the necessary information (for example the recipient’s name, the name of the organization, the date) and deliver them to the donor.
