Some of the more popular crypto currencies have increased several hundred percent in the past year alone. Majority of gains would seem to be attributed to the herd affect and we have seen business leaders talk up certain currencies and speculators go crazy driving prices higher.
Your interested now in diversifying your large gains and go see your tax professional to discuss your success. You find out short term gains are taxed much higher than those held for more than 1 year. How much you are taxed depends on other income and the size of your potential gains to cash out.
One option for you may be to gift some of these gains to your personal charitable bucket aka donor advised fund. If held longer than 1 year it is possible for full tax deduction treatment on the gains allowing you to give more. Some charities will accept crypto currencies directly while many have not set up digital wallet to accept such gifts.
Here is example of what this might look like: Jeremy invested most of his working bonus a couple of years ago into major crypto currency and now it has increase 10X or ten times and his initial $5,000 now is more than $50,000. If he simply sells it 15% capital gain (his rate: your rate could be higher or lower) or $6,750 taxes on $45,000 gain. Some Donor Advised Funds allow for crypto currency contributions. Money can be granted out to charities or held back and invested to grow more. One of the faster growing areas in charitable giving space is the area of “Impact Investing.” Often in private impact funds doing amazing things and earning a profit that further helps fund more impactful investments forward. Doing this inside a DAF does not incur taxes and provides more capital for grants to charities or grow more for giving later all while giving the donor more control.
Where to start when you have a appreciated assets and wish to gain clarity on what is possible to give and provide for the things you care and want to make impacts now and in the future? Call me Scott Thomas Chartered Advisor in Philanthropy and thought leader in this space of optimized giving and investing (407) 644-9411.