Charitable giving in crypto has a tax structure that is meaningfully better than giving cash, for any donor with appreciated long-term crypto positions. The mechanic, set out in Publication 526, is straightforward in concept: the donor transfers the crypto directly to the charity without selling it first, claims a deduction at the fair market value, and the charity (which is tax-exempt) sells the crypto without paying capital gains tax.
The execution detail that catches retail donors out is Form 8283. For non-cash donations above $500, the form is required. For donations above $5,000, the form must be accompanied by a qualified appraisal performed by a qualified appraiser. The IRS has been clear, in Chief Counsel Advice 202302011, that crypto donations above $5,000 require an appraisal even though crypto trades on liquid markets with publicly available prices. Donors who skip the appraisal and rely on the exchange's reported price have had the deduction disallowed in correspondence audits.
The mechanic, with numbers
You hold 0.5 BTC at a cost basis of $30,000, currently worth $70,000. You want to donate $35,000 to a 501(c)(3) charity. Two paths:
| Step | Sell-then-donate (cash) | Donate-in-kind |
|---|---|---|
| Sell 0.25 BTC for $35,000 | Capital gain of $20,000; tax of ~$3,000 at 15% LTCG | Skipped |
| Donate $35,000 to charity | Charitable deduction of $35,000 | Donate 0.25 BTC worth $35,000; deduction of $35,000 |
| Net cost to donor at 24% bracket | $35,000 + $3,000 - $8,400 = $29,600 | $35,000 - $8,400 = $26,600 |
The donate-in-kind path saves the donor $3,000 of capital gains tax that would otherwise have been due on the sale. The charity receives the same $35,000 either way. For appreciated long-term positions, donating in kind is strictly better for the donor and economically neutral for the charity.
The five steps that make the deduction stick
- Confirm the recipient is a qualified 501(c)(3). The IRS maintains the Tax Exempt Organisation Search for confirming status. Many crypto-native charities (Endaoment, The Giving Block partners) operate through donor-advised funds that have qualified status; many do not.
- Hold the crypto for more than one year. Donations of short-term appreciated property are deductible only at cost basis, not fair market value. The fair-market-value benefit applies only to long-term positions.
- Make the transfer on-chain to the charity's wallet. The IRS recognises the date of the donation as the date the crypto leaves the donor's control and is received in the charity's wallet. A pending transaction at year-end falls into the year of confirmation, not the year of broadcast.
- Get a written acknowledgment from the charity. Required for any donation over $250 per Publication 526. The acknowledgment must describe the property donated and state whether any goods or services were received in return.
- For donations above $5,000, get a qualified appraisal. The appraiser must meet the qualifications in section 170(f)(11)(E): an appraiser who regularly performs appraisals for compensation and has demonstrated expertise in valuing the type of property being appraised. The appraisal must be performed no more than 60 days before the donation and signed before the return is filed. The fee for a crypto appraisal is typically $300 to $1,000 depending on the asset and the appraiser.
The exception that retail donors hope applies but usually does not
Section 170(f)(11)(A)(ii) provides an exception to the appraisal requirement for "publicly traded securities". Some donors have argued that crypto trading on a major exchange should qualify as publicly traded property and therefore be exempt from the appraisal requirement.
The IRS rejected this argument in CCA 202302011 cited above. The reasoning: the section 170(f)(11) carve-out for publicly traded securities depends on the property being a "security" within the meaning of section 165(g)(2), which crypto is not. Until Congress amends the statute (which has been proposed but not enacted), the appraisal requirement applies to crypto donations above $5,000 regardless of how liquid the market is.
This is a place where retail donors have lost real money. The deduction is allowed up to $5,000 even without the appraisal; above that threshold, no appraisal means no deduction at all. A $50,000 crypto donation that should have produced a $12,000 federal tax saving (at 24 percent) produces zero saving if the appraisal is missed.
What to actually do
For donations under $5,000: complete Form 8283 Section A, attach to the return, keep the written acknowledgment from the charity. No appraisal required.
For donations of $5,000 or more: commission the appraisal before the donation if possible (or within 60 days), complete Form 8283 Section B, have it signed by the appraiser and the charity. Attach to the return.
For donations above $500,000: the appraisal itself must be attached to the return, not just summarised on Form 8283.
Our Crypto Tax Calculator tags donations as a non-taxable disposition (no capital gain or loss is realised on the donor's side) and produces a record of the asset, date, fair market value at donation and recipient address, which is the documentation the appraiser typically asks for. The tool does not perform the appraisal itself; for that, we maintain a referral list of qualified appraisers who handle crypto valuations.