Charitable contributions made in cryptocurrency cannot be deducted without an appraisal to establish how much the cryptocurrency is worth.
It does not matter that the particular cryptocurrency is traded on an exchange so that the parties can look up the value on the date the contribution was made, the IRS said in an internal memorandum.
This follows from an earlier IRS decision to treat cryptocurrency like property. (For more background, see “Cryptocurrency Tax Treatment” in the December 2019 NewsWire.)
In-kind contributions of property require an appraisal. Section 170(f)(11) of the US tax code makes exceptions for cash, publicly-traded securities and some other kinds of property where appraisals are not required. However, Congress has not updated the tax code to address cryptocurrencies, and the IRS declined to go beyond what the tax code says are publicly-traded securities.
The IRS analysis is in Chief Counsel Advice 202302012. The IRS made it public in mid-January.