Original Article - Cointelegraph- Tax-Free Ways to Transfer Bitcoin and Other Crypto: Expert Take
Toffer Wayne's Commentary
In my own recent Youtube videos I've discussed legal ways to reduce your annual tax burden - in particular I recommended leveraging charitable donations to offset income and capital gains from other assets. It is good to see within the recent article linked above that charitable donations make the top 3 suggestions.
Donation to charity
What if your gift isn’t to a person, but to charity? If you give to charity, that can be very tax-smart. If you give crypto to a qualified charity, you should normally get an income tax deduction for the full fair market value of the crypto. If you bought it for $500, and donate to a 501(c)(3) charity when it is worth $15,000, you should get a $15,000 charitable contribution deduction. What’s more, you won’t have to pay the capital gain or income tax on the $14,500 spread. That’s a good deal. It’s why most savvy people, think Warren Buffett, want to donate appreciated property rather than money to charity.
However there are other possibilities that are discussed within the article. For example using pass-through from corporations, which for most small-cap investors is out of reach. Another possibility is using the gift exemption, which as detailed therein reduces your lifetime estate deduction, once again for high net-worth individuals.
Any gifts over that $15,000 amount require a gift tax return, even though you may not have to pay any gift tax. Rather than paying it, you normally would use up a small portion of your lifetime exclusion from gift and estate tax. For 2018, that number went up dramatically. The amount you can transfer tax-free during your life or on death just went up to $11.2 mln per person. That is $22.4 mln per married couple.