capital gains tax on donation for non-itemizer

Forum|Forum|5 years ago
December 17, 2020
3 replies
29 views

If i bought 500 in bitcoin a few months ago and it's now worth 1000, and i now donate the bitcoin directly to a charity without redeeming for cash first, do I owe taxes on the $500 in capital gains (assuming i take the standard deduction)?

Opus 17

Level 15

No. However, if you itemized your deductions, the value of the donation would be your cost of $500, not the appreciated value.

The IRS treats cryptocurrency under the same rules as tangible personal property. You have a taxable gain if you sell it for more than you paid for it, but most users do not have a deductible loss if they sell for less, because taxpayers cannot deduct losses on personal property. (Some bitcoin investors who truly use it as an investment vehicle may be able to deduct losses, although this is so new that it really hasn’t come up in tax court yet. Casual buyers are treated as buying and selling personal property like other collectibles.) Under those rules, you don’t have a taxable event unless you sell the property and realize the gain yourself, but as a donation, the value of the tax deduction is what you paid rather than the value at the time of the donation.

dtnewman2Author

Level 2

So what if it were stocks? Do I owe short term capital gains if I donate them, even though I don't itemize?

Opus 17

Level 15

With stocks, you also don’t owe capital gains tax if you donate the appreciated stock without selling it, but in that case, if you do itemize, you can deduct the appreciated value.