IRS Updates “Frequently Asked Questions” on Virtual Currencies

January 08, 2020

By Richard Shapiro

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.
About Richard J. Shapiro

Richard Shapiro, Tax Director and member of EisnerAmper Financial Services Group, has over 35 years' experience in federal income taxation, including the taxation of financial instruments and transactions, both domestic and international.