I have some crypto. I hate crypto. How do I just make it go away?

February 19, 2022 8:00 AM

I want to get rid of some cryptocurrency, preferably via gift or donation, with the absolute minimum of paperwork and effort.

Back in 2013, a friend was working on an app and was adding a Bitcoin transfer feature. To test it out, they sent me (what was then) an insubstantial amount of Bitcoin. I just let it sit there, only using it once for a $5 online purchase in 2014 for yuks.

Fast-forward to now, it ended up in Coinbase, apparently some kind of fork happened in 2019, and now I have some Bitcoin, Bitcoin SV (BSV) and Bitcoin Cash (BCH) that's worth over $3k USD total. I don't want any of it. I don't want to cash it out and deal with the tax paperwork. I don't want any part of the crypto ecosystem and trying to look for any non-crypto-bro guidance on this online is challenging. I saw that BSV isn't supported on a lot of exchanges, and I don't want to get in any deeper with new accounts and shadier exchanges to convert things. I've put it off for this long because it all seems too complicated.

I've seen some charities that take crypto donations, but only popular ones like Bitcoin or Ethereum. How do I get rid of these other coins? Can I just transfer it somewhere as a gift and not have to think about it ever again? If there's anywhere I can send it that would help offset all of the environmental damage of crypto, even better.

I'm not interested in holding it or any pro-crypto or pro-NFT arguments. I just want to make it go away and get it all out of my life. What's the crypto equivalent of me leaving a pile of cash in the mailbox of a charity or worthy cause without caring about a receipt/tax deductibility?

posted by anonymous to Work & Money (6 answers total)

No Kid Hungry and Save The Children will take your Bitcoins but maybe not the BSV. My 5 min search seems to indicate that larger more established charities are prepared for this, so maybe think about which pet cause you want to support and check on their page if they take crypto.
I've donated in the past to Save The Children because they work with refugees, and to No Kid Hungry because they sponsor the holiday/summer meal backpack program in my area.
posted by fiercekitten at 8:18 AM on February 19, 2022 [3 favorites]

Even donating directly will realize the capital gains and you will need to report it.

This is not true. When you donate appreciated securities in the US, the cost basis passes to the recipient, and they are the ones who owe any capital gains tax if they later sell the securities. If the recipient is a non-profit with a 0% tax rate, then no tax is owed.

From the IRS Frequently asked questions on virtual currency transactions:

Q34. If I donate virtual currency to a charity, will I have to recognize income, gain, or loss?

A34. If you donate virtual currency to a charitable organization described in Internal Revenue Code Section 170(c), you will not recognize income, gain, or loss from the donation. For more information on charitable contributions, see Publication 526, Charitable Contributions.

See also Charitable gifts of appreciated property from Fidelity.
posted by mbrubeck at 8:48 AM on February 19, 2022 [12 favorites]

I am assuming you are in the USA, which is a statistically likely assumption I'm comfortable making with no additional information provided.

If the recipient is a non-profit with a 0% tax rate, then no tax is owed.

mbrubeck corrected this quicker than I got to it.

Completing the discussion here, if you make a donation to a 501c3 charity and incur no capital gains, there's no need to even report it on your tax return. Of course, if you itemize deductions and you don't itemize the donation, you'll get no tax benefit, but you also will incur no tax. Donations do not need to be reported to the IRS if you choose not to.
posted by saeculorum at 8:51 AM on February 19, 2022

I think if you have 3K total the non-bitcoin (bitcoin cash / bitcoin sv) stuff amounts to maybe $30 at most? If that's the case it's more trouble than it's worth for anyone else so just sell it on coinbase for whatever the going rate is. Doesn't matter if they give you dollars or bitcoins or whatever, or what they take out for fees or even if they give you anything at all. The friction in moving that around is going to be most costly than the benefit for any charity, so you're best off just getting rid of it (assuming I have the monetary amount roughly correct).

Then pick a charity that accepts bitcoin and makes it easy for you to donate to them, as mentioned above.
posted by true at 11:45 AM on February 19, 2022

$3000? This may not be the 100% correct legal answer, but I'd just forget about it. Pretend it doesn't exist. I find it super unlikely that's going to give you any legal or tax problems, ever.
posted by ctmf at 1:47 PM on February 19, 2022 [2 favorites]

Just forget about it. You are only out five dollars. For you to cash out, somebody else has to go in for 3000. Just say no.
posted by spudsilo at 8:54 PM on February 19, 2022