Make the most of your bitcoin

In 2013, Alex began working for a small start-up that was focused on leveraging a new technology called Bitcoin. As a developer and co-founder, he opted to be paid in bitcoin. At the time, one bitcoin was worth $100.

In 2017, he realized his bitcoin appreciated to twenty-five times the value of when he got it. Wanting to make a significant charitable contribution to the cancer center that helped his father battle lymphoma, Alex knew that if he sold some of his bitcoin now, he would have to pay capital gains tax on the appreciation because he acquired it and started holding it for investment purposes two years ago. Then he heard that Fidelity Charitable could accept bitcoin as a charitable contribution.

Maximize Your Charitable Giving

He made a contribution of bitcoin in-kind, which was worth about $250,000 at the time, to Fidelity Charitable, as opposed to selling the bitcoin and donating the after-tax proceeds.

Fidelity Charitable, a tax-exempt public charity, used Coinbase, Inc. to exchange the bitcoin for US dollars. Because of Fidelity Charitable's tax-exempt status, it was able to sell the bitcoin without having to pay capital gains tax. In addition, Alex would generally be entitled to claim a fair market value tax deduction for the contribution.4 As a result, Alex is able to support his favorite charities by way of grant recommendations and he could claim a higher deduction than if he only donated the after-tax proceeds of his sale of the bitcoin.

By contributing the shares to Fidelity Charitable, they were able to eliminate their capital gains tax exposure and take a charitable deduction in the amount of the fair market value of the shares.

Reach Rewarding Results

Due to these tax efficiencies, with his Giving Account, Alex was able to dedicate an additional $57,120 for charitable use.

Supporting Charities is Simple, Effective, and Accessible

Alex realized that by contributing bitcoin to Fidelity Charitable, he could lessen his capital gains exposure and claim a higher tax deduction than if he sold the bitcoin and donated the after-tax proceeds. Furthermore, after the bitcoin contribution was accepted, Fidelity Charitable sold the bitcoin and allocated the cash proceeds to Alex’s Giving Account without transaction fees being taken from the proceeds. This enabled Alex to recommend a sizable grant to the cancer center. He also realized that he would have additional funds available for a grant recommendation next year to his alma mater. Alex was pleased with the ease and efficiency made possible by using his Giving Account and contributing bitcoin electronically.