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Author: Admin | 2025-04-27
It, trading it, or spending it.The cost base of gifted crypto is inherited. This means the recipient takes on the cost base of the original asset from the donor. The donor must provide the acquisition info - if they do, the cost basis of the donor can be inherited by the gift receiver. If no documentation to support the donor’s basis, the basis is zero according to IRS guidance.Donating cryptoTAX FREEThe IRS is clear that when you donate crypto to a registered charitable organization - you won't realize a capital gain or loss, so you won't pay Capital Gains Tax.You can even claim charitable donations as a tax deduction. Your charitable contribution deduction will be the fair market value of the crypto on the day you donated it.However, in the United States, check a charity's 501(c)3 status with the IRS' exempt organization database. A charity must have 501(c)3 status if you plan to deduct your donation on your federal taxes. If you're donating more than $500, you'll need to fill out Form 8283 when filing your crypto taxes. As well as this, the IRS is clear that if you're donating more than $5,000 in crypto - you'll need a qualified appraisal in order to apply a deduction.However, the Income Tax benefits of non-cash donations differ to the tax benefits of cash donations and any donations of crypto will be considered non-cash donations, including stablecoins.If you donate cash to a qualified organization, you can deduct the full value of the donation up to 60% of your adjusted gross income (AGI). Any unused amounts can be carried forward to the following 5 tax years.If you donate property, you can deduct between 20% and 50% of your adjusted gross income - the amount depends on the type of organization.For 2021, there was an enhanced deduction available of up to 100% of AGI for cash donations to qualifying organizations. This was a temporary measure as part of the CARES Act; the standard deduction rules applied again in 2022.Because of the enhanced deduction available for cash donations, a taxpayer may wish to cash out their crypto first before donating in fiat. Whether this would be preferable from a tax perspective will depend on the potential Capital Gains Tax owed on the cash-out.The IRS is quite clear that crypto mining is subject to Income Tax, as well as Capital Gains Tax when you later dispose of mined coins.It's important to note that if you're self-employed and running a crypto mining business, you'll also need to pay Self Employment Tax to cover your Medicare and Social Security contributions.As well as this, Biden's proposed fiscal budget for 2025 includes a crypto mining excise tax. This isn't in force
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