On July 11, Senate Finance Committee Chair Ron Wyden (D-Ore.) and Ranking Member Mike Crapo (R-Idaho) published a letter soliciting input on a wide array of questions on how digital assets should be taxed.
The call for feedback touches on policies that, if changed, would likely impact the flow of crypto gifts to nonprofits. Specifically, the letter requests opinions on whether policymakers should modify rules mandating that donors who gift greater than $5,000 in crypto obtain a valuation of their digital asset gift from a qualified appraiser to claim a charitable deduction. Currently, traditional financial instruments like stocks and bonds are exempt from this requirement, and eliminating it for crypto gifts would reduce costs for many crypto donors, with some donor savings likely being passed on to nonprofits.
Additionally, the letter seeks input on whether small crypto transactions should be exempt from taxation. Lawmakers have proposed making small crypto transactions tax-free in recent years to allow investors to make small purchases with digital assets without being subject to a capital gains tax, allowing crypto assets to be more readily used as a cash substitute.
The recent uptick in digital asset giving is likely due in part to donors gifting the assets in their portfolios that have appreciated the most, and allowing investors to avoid these taxes would likely put downward pressure on the charitable giving of crypto.
The letter notes that the pair of key tax writers is accepting feedback from the public on a rolling basis until Sept. 8.