Record-breaking gains in the cryptocurrency market during 2017 resulted in record-breaking donations to charitable organizations by Bitcoin investors according to fidelity mutual.
$70 million in charitable donations
The miracle cryptocurrency market that was epitomized by Bitcoin’s unparalleled rise from $1,000 to $20,000. Before the year’s end correction many made investors a lot of money. Now reports are showing that the good fortune was generously spread around.
Donations of more than $70 million in Bitcoin and other cryptocurrencies were given to various charitable organizations through Fidelity Charitable. This according to the organization’s own records which is a branch of Fidelity Investment Bank.
This amounts to a tenfold increase from 2016 when donations tallied to around $7 million said the organization which raises funds for 255,000 not for profit organizations. Fidelity didn’t, however, report a breakdown of how much of this funding was in the form of Bitcoin or any other cryptocurrency.
Of course, the crypto donations are a welcome windfall to charitable organizations but these are not completely selfless acts. Donations of the kind add up to create a fine buffer against the tax hit that many investors know is coming.
[the] ability to accept cryptocurrency donations allowed cryptocurrency holders to take advantage of the surge in appreciation to benefit charity. By donating these assets, the donors could eliminate the significant capital gains taxes on the appreciation while giving the full fair market value to charity.
Fidelity Charitable noted.
Crypto-income is still taxable income
As broken down by Fortune in its Q&A on taxes that, as with stocks, the amount owed is based on how long the currency is held. Those who sold cryptocurrency last year, or even converted it from one form to another must pay tax on any gains. Furthermore, if an investor sells cryptocurrency within the same year as buying it, it’s taxed as ordinary income. However, if the owner holds it for longer than a year it is taxed at the lower capital gains rate.
It seems though that not that many are taking advantage of the charitable tax breaks and are ignoring advice to report their Bitcoin profits. Fewer than 100 out 25,000 people reported any crypto-related income according to Credit Karma. Erstwhile the IRS is making moves to track down digital tax dodgers. There first successful step being their legal campaign to force Coinbase to hand over the names of all their investors.