Despite what started off as a nonsensical year with the storming of the U.S. Capitol and the rise in COVID-19 cases, to the geopolitical crisis in Ukraine, the IRS still expects taxpayers to file their 2021 tax returns on time by the April 18 deadline.
For the crypto community, investments and purchases have certainly sky rocketed over the past two years, thanks to the NFT boom. Depending upon how it was used – property and/or income, all of an individual’s cryptocurrency transactions must be reported, as every trade or sale is considered to be a “taxable event.”
While gifting and donating cryptocurrency are not considered to be taxable events, it’s still worth reporting. In the majority of cases, donating crypto isn’t considered to be a ‘charitable contribution’ as recognized by the IRS, which gives purpose to what B Charitable has been doing since 2019.
Founded by tax attorney Jonathan Shugart, B Charitable is an Alabama-based nonprofit that was built out of a desire to make charitable donations easier on all parties involved, most recently adding in the ability to make a donation with crypto, while still receiving the IRS-backing.
Shugart spent five years of his private practice helping clients with their estate planning and business planning needs, often discussing ways on how his clients could legally navigate charitable giving.
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As a tax-exempt entity, B Charitable serves as a donor advisory fund (DAF) that houses charitable gifting funds for individuals. As donors retain advisory privileges, they are able to also avoid capital gains tax due to the nature of a donor advisory fund. “Through the Coinbase commerce tool, donations are automatically converted from crypto into fiat to then be distributed appropriately,” Shugart said.
“Think of a donor-advised fund as a charitable giving account or charitable savings account,” says Shugart. “So think of it as if you have your own savings account. You put money into it as you’re able, as you want to, and then want to send it wherever. It’s most impactful to the charities. You can distribute parts or all of that fund out to the different charities that you care most about.”
Last month, B Charitable ran its Support Ukraine campaign, where it was able to integrate charity assessment organization tool Charity Navigator into its platform, as the tool has just released its compiled list of highly-rated nonprofits already engaged in relief and recovery efforts in Ukraine and its surrounding areas.
By integrating Charity Navigator, Shugart says that it provides the comfort and security necessary to users who want to make a difference by helping out Ukraine, but may not know the right charities (or the legitimate ones) to make their donations through.
Thankfully, B Charitable’s platform makes it extremely easy for users to donate in crypto, where once they click the “donate” button, their crypto is automatically converted behind-the-scenes into fiat, which doesn’t require the user’s involvement. Of the organizations on Charity Navigator’s current list, 23 charities were given a perfect 4-star ranking, where contributions to B Charitable’s Support Ukraine campaign will be split evenly among the 23 charities.
Ultimately, donors will all receive the IRS tax benefit of making a charitable contribution, which can be claimed on both 2021 and 2022’s tax returns, depending upon the tax period in which donations were made.
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