Bitcoin and other virtual currencies | ACLS American Council of Learned Societies

Bitcoin and other virtual currencies

Bitcoin and other virtual currencies

A gift of bitcoin, the computer-driven online money system, can be an excellent way to support the American Council of Learned Societies. In February of 2015, the I.R.S. announced that it would treat bitcoin and other virtual currencies as property rather than a currency thereby putting bitcoin on a track to becoming a true financial asset. This decision makes bitcoin subject to capital gains taxes if held as a capital asset in the donor’s hands. 

A gift of virtual currency may be right for you if:

  • You own virtual currency that you bought at least one year ago.
  • The virtual currency has grown significantly in value since you bought them.
  • You want to save income taxes or capital gains taxes.
  • You would like to make a gift to the American Council of Learned Societies.

How It Works
You transfer your virtual currency to the American Council of Learned Societies. We sell and reinvest your virtual currency and put it to use in our mission. 

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Tax benefits 
You may save income tax and capital gains tax when you give virtual currency that you have owned for a year or more. The tax ramifications of charitable gifts of virtual currency can be complex. Consult your tax adviser before making a gift of virtual currency. Click here for more information on the IRS web site.

Income tax benefit
If you have held your virtual currency for more than one year and acquired your currency for investment purposes, you may deduct from your taxable income the full fair market value of your virtual currency as of the date of your donation, regardless of what you paid for them. Your deduction is limited to 30% of your adjusted gross income. You may, however, carry forward any unused portion of your deduction for up to five additional years. 

Capital gains tax benefit
The capital gains tax treatment of gifts of virtual currency depends on whether the currency is a capital asset in your hands. If it is considered a capital asset, when you donate virtual currency that have increased in value, and you have owned the virtual currency for more than one year, you do not have to report any of your capital gain. If you were to sell these virtual currency yourself, you would owe capital gains tax on the difference between the sale price and the amount you paid for them.

Should I give my virtual currency or sell them and give the proceeds?
That depends. If your virtual currency has appreciated in value, you may be able to avoid capital gains taxes on a gift to the American Council of Learned Societies. Consult your tax adviser as to whether you would avoid capital gain on a gift of your virtual currency to the American Council of Learned Societies. If your virtual currency has dropped in value, you should convert it to cash and donate the proceeds. 

Is it easy to make a gift of virtual currency?
Yes. Whether you plan to give one virtual currency or one thousand, it is easy to give your virtual currency to us.    

Consult with us before making your gift
It is important that you discuss with us the virtual currency you are considering for donation before you make your gift. We want to be sure that we can accept it. Also, we will want to discuss with you what will happen to your property once we receive it. We want to be sure we will be able to carry out your wishes. This discussion will also help you anticipate the likely tax benefits of your gift.