@Shank20 thank you for another question. Well first off this is a good problem to have. With that said you should look at this holistically.
First, carefully examine the amount of time you’ve held onto each investment position. If possible, try to sell positions that are at least a year old, so that you can pay the more favorable long-term capital gains tax rates instead of short-term capital gains tax rates.
Second, harvest task losses, to see if other investment positions might have produced capital losses. In that case, realizing those losses, assuming you’re willing to part with the positions, could help offset outstanding capital gains. Tax-loss harvesting allows investors to offset up to $3,000 of ordinary income per year, but beware of wash sales and cost basis calculations to stay within the rules.
Third, purposefully await years in which your taxable income is less to realize capital gains on your investments.
Fourth, if you itemize your deductions, you may donate cryptocurrency to qualified charitable organizations and claim a tax deduction. You typically can deduct the fair market value of your cryptocurrency at the time of charitable contribution, and you don’t have to pay capital gains taxes when you donate.
Cryptocurrency charitable contributions are treated as noncash charitable contributions. A charitable organization may assist in documenting your crypto-charitable contribution by providing a written acknowledgement if claiming a deduction of $250 or more for the virtual currency deduction.
Fifth, you may want to look at Qualified Opportunity Funds (“QOFs”). Qualified opportunity funds (QOFs) mean to drive business and real estate investments toward low-income or economically distressed areas of the country. The federal government incentivizes investors to put money into these funds by offering preferential tax treatment on capital gains. Investors can reinvest any realized capital gains into these funds to defer taxes they owe on their gains, and ultimately can greatly reduce their tax bill down the road. Unfortunately, Turbo Tax does not support Form 8997.
Be well and safe,
All the best,
Marc T.
TurboTax Live Select Time Tax Expert
26 Plus Years of Experience Helping Clients
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