15 Jan IRS Updates “Frequently Asked Questions” On Virtual Currencies
The IRS has updated its list of frequently asked questions (“FAQs”) on virtual currency transactions, addressing (i) a charity’s donor acknowledgement responsibilities when accepting virtual currency donations and (ii) a charity’s IRS reporting requirements.
- A charitable organization can assist a donor by providing the contemporaneous written acknowledgement that the donor must obtain if claiming a deduction of $250 or more for the virtual currency donation. Also, a charitable organization is generally required to sign the donor’s Form 8283, Noncash Charitable Contributions, acknowledging receipt of charitable deduction property if the donor is claiming a deduction of more than $5000 and if the donor presents the Form 8283 to the organization for signature to substantiate the tax deduction. The signature of the donee on Form 8283 does not represent concurrence in the appraised value of the contributed property.
- A charitable organization that receives virtual currency should treat the donation as a noncash contribution. Tax-exempt charity responsibilities include the following:
- Charities report noncash contributions on a Form 990 series annual report and its associated Schedule, if applicable.
- Charities must file Form 8282, Donee Information Return, if they sell, exchange or otherwise dispose of charitable deduction property (or any portion thereof) – such as the sale of virtual currency for real currency – within three years after the date they originally received the property and give the original donor a copy of the form.
Written by Richard Shapiro, Tax Director and member of EisnerAmper Financial Services Group.
To learn more, contact Eric Altstadter, Partner, EisnerAmper by emailing Eric.Altstadter@eisneramper.com or calling 212.891.4058 or 516.864.8888.
This article is a republication of content originally published by EisnerAmper, https://www.eisneramper.com/faq-virtual-cc-blog-0120/, used with permission.
This article is for general information and education only. It is provided as a courtesy to the clients and friends of EisnerAmper. EisnerAmper does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. This article may not be reproduced, distributed or further published by any person without the written consent of EisnerAmper. Please cite source when quoting.