Donating Cryptocurrency to Charity: Appraisal, Form 8283, and Basis Rules

A donor who transfers appreciated cryptocurrency directly to an eligible charity generally does not recognize the built-in gain merely because of the gift. The amount of the charitable deduction, however, depends on the asset's holding period, adjusted basis, fair market value, recipient organization, percentage limitations, and substantiation.

Long-Term and Short-Term Holdings Produce Different Deductions

Cryptocurrency held for more than one year is generally long-term capital-gain property. A direct contribution to a qualifying public charity may generally be deductible at fair market value, subject to the applicable adjusted-gross-income limits and other rules.

For cryptocurrency held one year or less, or property that would produce ordinary income if sold, the deduction is generally limited by basis or reduced by the amount that would not have been long-term capital gain. Gifts to private foundations and contributions subject to unrelated-use or other special rules may also receive different treatment.

A Qualified Appraisal Is Often Required Above $5,000

The IRS has treated cryptocurrency as property that generally does not receive the publicly traded securities exception from the qualified-appraisal requirement. When the claimed deduction for related property exceeds $5,000, the donor generally needs a qualified appraisal and the appropriate appraisal summary on Form 8283.

The threshold can require aggregation of similar items donated during the tax year, including gifts to multiple recipients. Dividing one planned gift among charities does not necessarily avoid the appraisal rules.

An exchange screenshot or automated price report can help support value but generally is not a substitute for an appraisal meeting the regulatory timing, content, signature, and qualified-appraiser requirements.

Written Acknowledgment and Form 8283

For a contribution of $250 or more, the donor generally needs a contemporaneous written acknowledgment from the charity stating whether goods or services were provided. The acknowledgment does not establish the donated property's value.

When Section B of Form 8283 is required, the qualified appraiser and donee generally complete their respective portions. The charity's signature acknowledges receipt and does not represent agreement with the donor's claimed value.

If the Charity Disposes of the Cryptocurrency

A charity that disposes of donated property within three years may generally need to file Form 8282 and provide a copy to the donor, subject to exceptions. Many charities immediately liquidate digital assets to manage volatility, so donors should expect that possibility and should not condition the gift on a particular investment decision unless the charity has agreed and counsel has reviewed the restriction.

Donate the Asset, Not the Sale Proceeds

The potential gain-avoidance benefit generally requires a completed gift before the donor has become legally obligated to sell the asset. If a sale is already effectively fixed or the donor sells first and contributes cash, assignment-of-income principles can change the result.

Records to Retain

Keep acquisition and basis records, holding-period support, wallet addresses, transaction hashes, proof of the charity's ownership of the receiving wallet, fair-market-value data, the appraisal, Form 8283, acknowledgment, and any Form 8282 received later.

Charitable deductions depend on the donor, asset, recipient, timing, and current federal law.

This information is educational and is not a valuation opinion or advice about a specific gift.