How Bitcoin Can Protect Your Nonprofit from Proposed Tax Changes
Dec 01, 2017 01:21PM
● By Jim Farren
There’s been a lot more talk these days about how nonprofits can possibly benefit from Bitcoin and crypto-currency. It’s a great question and there’s no better time than now to consult your financial professionals regarding your personal situation. However, don’t be surprised if they aren’t knowledgeable about crypto-currency and tax codes as many in the financial world have yet to learn the ins and outs of this progressive currency. With this in mind, it’s a good idea to get as many second opinions as possible; especially with the uncertainty of the new tax code.
Below are two common questions about Bitcoin currency and taxes:
Are donations made in Bitcoin tax deductible? To illustrate the answer to this question, I defer to a famous line often used by John Cleese’s announcer character in Monty Python’s Flying Circus: “And now for something completely different.”
The answer is that there is no answer because the question no longer makes sense in the world of cryptocurrency. We are so used to thinking in the old paradigm of conventional fiat currency, banking, economics and tax codes that we can’t wrap our minds around the “new reality” that we are entering. Carlos Castaneda would probably have trouble with this too, so don’t feel bad.
Bitcoin held in a Blockchain.com digital wallet is completely anonymous; it is also completely invisible…period. Nobody, including the IRS, can see, find or determine who owns the Bitcoin in a Blockchain.com account. However, this is not the case for other wallets like Coinbase.com.
Since Bitcoin has no identifiable “ownership” there is no one to receive a tax deduction for donating it. And since Bitcoin, held as such, has no ‘ownership identification’ it is not taxed in the first place so there is no ‘need’ for a deduction. The question therefore is irrelevant.
How can Bitcoin benefit a nonprofit? Let’s start simple. If you own Bitcoin, you can transfer it to a nonprofit Blockchain.com wallet anonymously. You pay no tax, the nonprofit pays no tax, and there is no need to complicate your tax return. However, if you want credit or an acknowledgement for your gift, then this route won’t work for you.
Let’s look at some other benefits. Buying and holding Bitcoin is likely going to continue to be a huge wealth builder for the foreseeable future. Right now, we’re in a “gold rush” phase which could last for 18 months to three years depending on the acceleration of global adoption. By owning and donating Bitcoin to a nonprofit you are giving them, and yourself, a gift that will continue to “appreciate in value.”
Also, there are vetted investments that can be made with Bitcoin that will multiply the number or amount of your Bitcoin so you both will be multiplying an appreciating asset. That’s called exponential growth.
Many knowledgeable experts agree that we will not see a global, historical event of this magnitude any time soon—at least not in our lifetime.
Cryptocurrency, Bitcoin especially, takes money out of the control of governments, banks and central banks and puts it directly into the hands of the people that own and use it. It is the end of inflation. It is global financial stability. It levels the economic playing field. It makes ‘banking’ available to the poorest of the poor and provides an unparalleled opportunity for early adopters to generate immeasurable wealth in an incredibly short period of time.
Learn more about Bitcoin and cryptocurrency.
Jim Farren is the president of Protech Consulting Solutions, a division of Protech Enterprises, Inc. He invites you to become Bitcoin Wise by visiting BitcoinWiseUSA.com. For more information, call 760-670-3244 or [email protected].
Companies who accept Bitcoin
Here is a list of San Diego businesses accepting Bitcoin. In addition, The Power of Purpose, a company that helps nonprofits by finding and facilitating donations of real estate for them and then its sale, also accepts Bitcoin, along with the nonprofit organization Living Legacy Institute. Natural Awakenings magazine also accepts Bitcoin for advertising contracts.
Check out this article to discover how the new tax code could dramatically and negatively impact charitable giving.