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Just to be clear, this does not mean donating crypto leaves you with more money than keeping/selling it: If you have $1000 worth of crypto that you bought for
by tgsovlerkhgsel 3y ago
Just to be clear, this does not mean donating crypto leaves you with more money than keeping/selling it:
If you have $1000 worth of crypto that you bought for $100 and donate it, you have $0 worth of crypto (because you gave it away) and e.g. $400 (assuming a 40% marginal tax rate) worth of tax savings.
If you sell the crypto instead and keep the money, you pay e.g. 33% (20% federal + 13% California) taxes on it, and you have $0 worth of crypto (because you sold it) and $670 worth of cash after taxes.
- gene91 3y agoNitpicking the numbers. If you're assuming 13% California, that's $1M annual income. You should assume 37% marginal federal tax rate for deductibles, and assume 23.8% federal tax rate (due to NIIT) for long-term capital gains. Therefore, donation generates $497 of value (37%+13.3%=50.3%) whereas selling and keeping generates $632 of value (23.8%+13%=37.1%). Therefore, the difference ($135) is quite a bit smaller than your math ($270).
- londons_explore 3y agoNumbers like this explain why charities are such big business. If I earn just 13 cents on the dollar of benefits from a charity (for example in freebie gala meals or networking events), then even selfish rich me would do well to give to charity.