Bitcoin CRUT Donation

Bitcoin CRUT donations require a qualified appraisal for the Bitcoin that is donated to the CRUT.  The IRS Form 8283 is filed with your personal tax return to verify the donation of Bitcoin or other cryptocurrency for any donation of over $5,000 of Bitcoin or cryptocurrency.  For donations over $500,000 the qualified appraisal report must also be included with your personal tax filing.  

A charitable remainder unitrust (CRUT) pays out annually a defined return on your donation in the CRUT and gives you a K-1 form from the filing of an IRS Form 5227 Split Interest Trust efiling.  The remainder of the trust at the death of the beneficiary will go to a designated charity.  

The charitable donation of Bitcoin or cryptocurrency with a one year or more holding period avoids any capital gain that would be realized on a sale because the property was donated to a CRUT. The donation amount is reduced by tables based on life expectancy to a fraction of the total fair market value of the total Bitcoin or cryptocurrency donation.  Each year the payout has some elements or return of principal (tax free) and payout of income (taxable) to the beneficiary of the CRUT.  

One item to be careful of with a CRUT donation is to issue a thank you letter proactively declaring the amount of the donation and the net value of the donation so the donor can obtain written documentation of the donation amount.  

A Bitcoin appraiser on a donation to a CRUT is simply declaring the value of the Bitcoin donated and not determining the fraction of the donation that is tax deductible on the IRS Form 8283.  The independent appraiser simply signs the IRS Form 8283 to certify the full value of the Bitcoin at the date the donation was received by the charity.