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IRS updates FAQs on cryptocurrency

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Tax Hot Topics newsletterThe IRS recently supplemented its existing frequently asked questions (FAQs) related to the tax treatment of transactions involving virtual currency, which includes cryptocurrency.

The new FAQs include guidance related to the donation of virtual currency to a charity, providing that a charitable organization can assist a donor by issuing the contemporaneous written acknowledgement that the donor must obtain for a deduction of more than $250. In addition, the new FAQs reiterate that a charitable organization must sign the donor’s Form 8283 if the donor is claiming a deduction of more than $5,000 and if the donor presents the Form 8283 to the organization to substantiate the deduction.

The new FAQs also clarify that a charitable organization that receives virtual currency should treat the donation as a noncash contribution, which should be reported appropriately on Form 990. Charities must also file Form 8282 and give the original donor a copy of the form if they sell, exchange, or otherwise dispose of charitable deduction property, including charitable deduction property that is virtual currency, within three years after they originally received the property.
 
Contacts:
Jeff Borghino
Partner
Washington National Tax Office 
T +1 202 521 1532
 
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