@wasCB14 wrote:
It sounds like you're trading one cryptocurrency for another, and classifying it as a like kind exchange? Then donating appreciated "property" to avoid the gain while getting FMV for the deduction?
It's sound in theory, but the IRS has plenty of time to make up its mind. I have no idea if it will fly or not.
If the donor or donee was asked to provide evidence of such a donation to the IRS...beyond the usual brief written statement...would that compromise a donor's anonymity on bitcoin?
I guess it's complicated.
If I donate $500 cash (USD) to a church, for example, I get to report a $500 donation on my taxes.
If I donate $500 in bitcoin to a church, but I paid $50 for the bitcoin 2 years ago, do I report a $500 donation? Or do I report a $500 donation along with a $450 capital gains on investment income?
Bitcoin isn't anonymous -- in fact there are at least 14 companies whose sole purpose is to figure out whose balances are tied to what individual/group. Other cryptocurrencies have developed truly anonymous "wallets" and truly anonymous transactions to other truly anonymous wallets, but bitcoin as of yet hasn't incorporated these newer methods. I figure in 2-3 years, bitcoin will probably adopt the more secure methods of anonymity, but right now bitcoin isn't anonymous.
I've asked for clarity on donating crypto from the tax bodies, but as of yet they're either clueless or don't want to commit on how to disclose them. So I do my best within my understanding of the laws.
