Charitable donations of virtual currency
According to the IRS, when a charitable organization receives virtual currency, such as Bitcoin, it should classify the donation as a noncash contribution. These contributions need to be reported on a Form 990-series annual return along with Schedule M, if applicable.
Furthermore, charities are required to file Form 8282 (Donee Information Return) if they sell, exchange, or dispose of the virtual currency within three years of receiving the donation. They must also provide a copy of this form to the original donor. The IRS has recommended that charities assist donors by issuing contemporaneous written acknowledgments for virtual currency donations valued at $250 or more, and by signing Form 8283 for deductions exceeding $5,000.
Visit the IRS FAQs on virtual currency or contact a ShindelRock tax professional for more information.