The recent ascent of bitcoin and other cryptocurrencies has enriched early investors with returns more akin to the lottery than your typical bread-and-butter investment.
Bitcoin has been called a lot of things, but the IRS views it property and not currency and taxes it accordingly.
To the extent that you sell your bitcoins within a year of purchasing them, any gains would be taxed at your ordinary income tax rate.
A charitable remainder trust allows donors to gift an asset to a trust designated to benefit a qualified charity at the death of the donor.
While the charity won’t receive the gift until the donor passes away, the donor gets an immediate tax deduction.
They receive lifetime income of 5% a year, assuming a life expectancy of 81, and the present value of the remaining balance left to the charity at the death of the donor would be an estimated $1.3 million.
It’s worth noting that this strategy is generally accompanied with the purchase of life insurance to replace the gift in the event that the donor dies prematurely.
These are complicated strategies, and the trust can vary in the frequency of future donations as well as the ability to defer payments from the trust that allows the principal to grow.
Investors considering this course of action would be advised to speak with a qualified estate-planning attorney and a qualified tax advisor to help them navigate the laborious details and IRS requirements.