With the market capitalization of digital currencies surpassing $2 trillion, there is now record interest in crypto philanthropy. From helping to build a school in Uganda to fundraising for frontline healthcare workers and raising awareness for artists with intellectual disabilities, many nonprofit projects are gaining traction with generous assistance from crypto enthusiasts.

But the rewards of giving crypto to charities aren’t limited to the feeling of having accomplished an altruistic task. The Internal Revenue Service currently classifies crypto as capital assets, like stocks. That means an investor can deduct the full market value of the cryptocurrency at the time of donation against their ordinary income (i.e., salary) over the period of a few years, while avoiding the capital gains tax altogether.

For example, suppose a crypto investor, Elsa, makes $85,000 per year on employment income (single tax filing) and bought $10,000 worth of Bitcoin (BTC) four years ago. In December, she donates the full value of her investment, now worth $29,650, to the American Cancer Society.

Not only does the ACS get a lump sum of cash to fund its operations, but Elsa can deduct 30% of the value of her donation per year, with the remaining amount carried forth for a maximum of five years. So her income for tax purposes for year one would only be $76,105, with Elsa saving $7,116 in federal taxes in total due to her donation.

The generous tax treatment of crypto donations may be precisely why the practice is becoming so popular. In an exclusive interview with Cointelegraph, Alex…

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