Thursday, June 16, 2016

Charitable Contributions In Bitcoin?

Last week, the American Institute of Certified Public Accountants submitted a Comment Letter (full text) to the Internal Revenue Service in response to a two-year old IRS Release seeking input on issues relating to virtual currencies (such as Bitcoin). The AICPA said in part:
The AICPA encourages the IRS to release additional, much needed, guidance on virtual currency. Specifically, we request further guidance on the following items: ***
Provide guidance to explain when a donation of virtual currency, valued above $5,000, does not need a qualified appraisal to substantiate a charitable contribution deduction. Additionally, provide guidance on how to document the virtual donation values.
A charitable contribution of property with a value in excess of $5,000 requires a qualified appraisal from a qualified appraiser. An exception exists for contributions of publicly traded stock. The rationale is that the prices of these publicly traded stocks are available on published exchanges, thus not requiring a qualified appraisal. The same is true for most, if not all, types of virtual currency. That is, an exchange publishes the values of this currency on any given day. Therefore, a similar exception should apply for virtual currency donations in excess of a certain amount.