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How do I determine the deductible value of a charitable contribution made in cryptocurrency?

SOLVEDby TurboTax148Updated 3 weeks ago

Virtual currency is treated as property for federal tax purposes, just like stocks. This means you'll use the fair market value of your coins to determine the deductible value of your gift. The crypto marketplace often fluctuates dramatically, so your donation may be much larger or smaller than the original cost of your coins.

Step 1: Make sure your cryptocurrency donation is eligible for a deduction.

Your cryptocurrency donation must be made to a qualified charitable organization. Below are some examples of qualified charities:

  • Churches, mosques, temples, synagogues, and other religious organizations
  • Nonprofit schools, museums, and youth organizations 
  • Nonprofit hospitals and humanitarian aid organizations
  • War veterans’ groups

If you aren't sure the organization you donated to is a qualified charity, check the IRS Tax Exempt Organization Search database.

Step 2: Determine your cryptocurrency’s fair market value.

To determine the cash value (the US dollar [USD] amount) of the donated cryptocurrency, you must determine the fair market value (FMV) on the date of the donation.

To find the value of the cryptocurrency in question, you can visit a cryptocurrency price-tracking site. Use the close price or the average price of the cryptocurrency on the date of the donation. It doesn't matter which you use, but be consistent with the method used in all of your calculations and keep records of your math.

Example: You donated .25 bitcoin (BTC) on November 13, 2023. On that day, the close price of BTC was $16,353.37. Multiply .25 BTC by $16,353.37. The result is $4,088.34. This is the FMV of your donation.

Note: If your cryptocurrency donation has an FMV that exceeds $5,000, you must get a qualified appraisal. The qualified appraiser will determine the FMV for you, saving you some work. You can do an internet search to find appraisers qualified to value cryptocurrencies.  

Step 3: Determine the deductible value of your donation.

If you held the virtual currency for more than one year, your charitable contribution deduction is equal to the FMV of the virtual currency at the time of donation.

If you held the virtual currency for one year or less, your deduction is the lesser of: 

  • Your basis in the virtual currency, or 
  • The virtual currency’s FMV at the time of the contribution.

Enter your deductible value in the charitable contributions section of TurboTax. Your crypto donation falls under the Items category, and should be entered as other intangible property.

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