When your charitable organization accepts virtual currency donations, your donor acknowledgment responsibilities include the following:
- Contemporaneous Written Acknowledgment: If a donor claims a deduction of $250 or more for the virtual currency donation, your organization can assist by providing a contemporaneous written acknowledgment. This acknowledgment must include the amount of cash and a description (but not the value) of any property other than cash contributed, whether the donee organization provided any goods or services in consideration for the contribution, and a description and good faith estimate of the value of any goods or services provided by the donee organization in consideration for the contribution.
- Form 8283: If the donor is claiming a deduction of more than $5,000, your organization is generally required to sign the donor’s Form 8283, Noncash Charitable Contributions. The signature on Form 8283 acknowledges receipt of the property described on the form on the date specified and indicates that the donee understands the information reporting requirements imposed by section 6050L on dispositions of the donated property. The signature does not represent concurrence in the appraised value of the contributed property.
- Qualified Appraisal Requirement: For contributions of cryptocurrency for which a deduction of more than $5,000 is claimed, the donor must obtain a qualified appraisal. Your organization should be aware that the donor cannot rely on the value reported by a cryptocurrency exchange to meet this requirement. The appraisal must be conducted by a qualified appraiser in accordance with generally accepted appraisal standards.
- Form 8282: If your organization sells, exchanges, or otherwise disposes of the donated virtual currency within three years after the date it was originally received, you must file Form 8282, Donee Information Return, and provide a copy to the original donor. This form reports the disposition of the charitable deduction property.
By adhering to these responsibilities, your organization ensures compliance with IRS requirements and assists donors in substantiating their charitable contribution deductions.
Sources:
Notice 2014-21
Rev. Rul. 2019-24
CCA 202302012
