Bitcoin and Crypto Donation Appraisals

Why does Bitcoin need to be valued by an appraiser when donated?
The IRS considers Bitcoin to be property.  All property donations are required to be valued by an independent appraiser when the value of the donation exceeds $5,000.  This independent valuation assures the IRS that the donation is taken at the correct dollar amount on your tax return.  

Could I just cash out my Bitcoin and donate the funds?
Yes - you could make a cash donation to your favorite charity, but you would most likely incur long term capital gains tax when you sell your Bitcoin, so the property donation of Bitcoin allows you to deduct the fair market value of the Bitcoin plus avoid paying capital gains tax on the unrealized gain in your Bitcoin.  

What if my charity does not take Bitcoin donations?
You can donate to your charity indirectly by first donating to a charity that does accept Bitcoin donations and then transferring the funds via a donor advise to the charity of your choice.   Donor advised funds are available at Fidelity Charitable and other large charities that offer charity donor advised accounts.  
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How does the appraisal process work?
The donor provides proof of their donation and facts about their donation to the appraiser.  The most common form of proof is the thank you letter from your charity.  This letter is required to be sent to you by your charity when you make a donation of $250 or more so it should be easy to obtain.  Once the appraiser provides you with the signed IRS Form 8283 you can provide this to your charity for the charity to sign page 2 and acknowledge the charity received your Bitcoin donation and then the fully executed IRS Form 8283 needs to be included with your personal tax filing when you take the donation deduction on your personal tax return.