Accepting/gambling with crypto donations

Off-Topic
41

Since Coinbase is unwilling to help Haiku in this situation, then I suggest that we form two teams. Those of us willing to buy the Bitcoin from Haiku and those of us willing to fund the tax liability for sold Bitcoin. I will gladly buy what Bitcoin I can. There may be some who can (or are willing to) do both.

If there another solution? Can a non-profit donate a donation and have it not be a taxable event? You could always just donate the Bitcoin to someone, if that were true.

If the cryptocurrency is a curse… something you can’t use, because no one wants to deal with the taxes, then you need to just get rid of it as cheaply as possible and close the Coinbase account.

42

Forward the emails with Coinbase , I’ll have my lawyer look at ut

43

Why not just donate money to the inc instead?

Also, I think you kind of missed the point that the account holder would be liably for the tax /personally/, nothing donated to the inc will change that.

Excelent idea, since we are all in agreement that the coins are worthless we can just close the discussion.

1 Like
44

Bitcoin is worth money. Doesn’t matter if it’s insane to think so. It’s worth fiat. If whoever runs the account doesn’t want to deal with the tax burden of selling the BTC, then we have to figure out some way around it.

Find out what the tax basis is for the BTC donation(s) via Node40 or other site. I’ll be glad to help explain how Node40 works, if needed. If it’s worth LESS now, than it was when it was sent to you, then it’s a LOSS sell, which is beneficial to you during tax time. Means you’ll owe less taxes.

On the other hand, if a non-profit doesn’t/can’t pay taxes, then someone willing to deal with the tax headache needs to be found. If I get money from Bitcoin and/or other cryptocurrency (which I will in a couple years; around 2024/2025), I have no problem paying what I owe Uncle Sam. I don’t mind paying INCOME tax… it’s SALES tax I don’t understand. You pay for stuff and then you gotta pay MORE on top of that? Shouldn’t the SELLER be the one paying the sales tax, since it’s their INCOME?

But anyhow… I’m looking to buy more Bitcoin as it comes down in price. If the BTC can be gifted/donated to someone else, without any negative effect, then that would be a way of offloading it, since it’s technically worthless to Haiku.

I know the big problem is the tax situation, but… why? What is so horrible about paying taxes? You GET the money from selling the Bitcoin and then you pay taxes on that sale and you pay the taxes from the funds you got from the sale of the Bitcoin (you don’t use the money until after you’ve paid the taxes on it). Not like you have to pay taxes on money you don’t have. And if you technically LOST money because the basis was higher, then you don’t have to pay anything on it… so far as I know.

1 Like
45

@leavengood, if Haiku Inc. too thinks cryptocurrency is more trouble than it’s worth, the section should be removed from https://www.haiku-inc.org/donate/.
Lest someone burdens us with more of that stuff… :slight_smile:

4 Likes
46

Ok, let’s figure this out. You said no one wants to involve themselves with the tax consequence of this. Having already done so in times past (and doing so for the 2021 tax year as well), I have absolutely no problem with the tax consequences of my cryptocurrency dealings. I’m planning on holding what I have and building it up further, as possible, til the next peak. When I sell it, I’ll deal with the taxes, as I know I’ll have plenty to cover my tax liabilities at that time, just as I did in 2018.

However I would not want my personal details associated with the Hailu account itself. I’m not Haiku. But I have no problem dealing with the tax consequences of any Bitcoin I hold and sell later. So I may be 50% of the solution. :grinning:

But I’m still wondering if the donated Bitcoin can be donated to another individual and not have any tax consequences for Haiku. That way, you can get the benefit of the Bitcoin at the best time, and not have to directly deal with any tax consequences.

47

Ok, I think I may have a solution:

Can my 501(c)(3) Donate Money to Another 501(c)(3)?

The short answer is yes, a 501(c)(3) may donate to another 501(c)(3).

While you can donate to another 501(c)(3), note that your organization is responsible for any misuse of funds by the receiving structure. Be sure to do your due diligence to ensure that the recipient of your gift is a legitimate organization, with solid values that line up with your own.
——-

Assuming you can create a secondary Haiku non-profit on Coinbase, that is (this time) correctly associated with (an institutional account?), you may be able to donate your Bitcoin to that account. Because Haiku 1 and Haiku 2 would both have the same interests, there’s no funny-business going on. You’re just trying to get access to your Bitcoin’s value without tax consequences. Haiku 1 then gets the appropriate paperwork from Haiku 2, to then hand over to the tax people, to verify that it’s a donation to a 501(c)(3) and so gets the benefit of the then current value of Bitcoin for that tax year. Once that’s done, you can close out Haiku 1’s Coinbase account and only use Haiku 2’s Coinbase account from then on, now that it’s properly configured. :grinning:

It’s a horribly convoluted way of having to solve this dilemma, but I’m sure people like Bill Gates and others do it all the time. Charity to charity donations. But at least it would end this “Bitcoin deadlock”… so far as I know.

1 Like
48

Thank you, Luposian and S Collins for actually addressing the question of how to convert Bitcoin into real money for the Inc.

For those who say it’s imaginary, it’s not. The Haiku holding is currently worth US$73,000. At the peak last year it was worth US$239,000. Of course, you can never sell at the peak unless you are exceptionally lucky, but we can’t just sit on our hands and let it all disappear.

As I wrote earlier, I think the Inc needs to spend a little bit of money with a professional accountant to establish exactly what the tax implications are, if any, and structure things so that there is no loss to the individual . Assuming there is a profit (and the coins were donated years ago, so there will be) the tax (if applicable) can be paid out of the proceeds. There should be no tax liability on whoever sells them.

It’s sad that somebody felt it necessary to suggest that I wanted to “make fun of people who thought Bitcoin was a good idea”. And “… maybe just wait until bitcoins aren’t worth anything and we can forget about them.”

All I want is for the Bitcoin to be converted into real money so that Haiku can use it.

3 Likes
49

So after reading this thread, of those that are clamoring for the .Inc to sell (@Luposian , @SCollins , @Sebrof) - Who can actually help with the Coinbase predicament? Sounds like as soon as that was resolved, the .Inc wants to sell its crypto currency?

As someone who has no experience with holding crypto currency, I take it that nothing can be done with the holdings until the Coinbase account is sorted?

50

How many coins ??

51

That is basically what we have been trying to do, create a proper institutional account where we can transfer the Bitcoin and then can convert to USD. But it is a ridiculous labyrinthian process. I don’t know if they are trying to stop drug dealers or arms dealers or we are too small, but the process has been kind of insane. It wasn’t just fill out a form. I’m surprised they didn’t ask for me to send blood or something.

When Alex emailed Coinbase again they did respond but I only recently noticed the reply. I have not had as much time lately to read the Haiku, Inc email account. Maybe we can sort it out if I look into it again.

But overall I think everyone should relax. We don’t need the money at the moment. If we turn it into USD it will be then just be another currency that is quickly losing its value. We don’t currently have any sort of savings account, and even if we did it would barely pay any interest.

As reported in the financial report for 2021 at the end of that year we had 3.69343483 Bitcoin. We got a few more small donations since then and we currently have 3.69529078. The current USD value is around $75,000. The last peak was in November 2021 and at that point our holdings were worth $257,000.

I am not a huge fan of cryptocurrency. But given the potential upside of holding it I lean more toward that. But either way I have to sort out the account so it isn’t completely useless.

9 Likes
52

Ryan if you need help, lmk

53

In April 2021, there was the BTC peak of $84/stock. So, two times a chance on the Y2021 roulette table…

Jackpot/Lottery math below (USD):
You can cash out and have the taxes withheld from the investment payout - from the payer. You can use a rule of thumb of a payment of $1M USD has a $300K USD of tax withheld (i.e. if requested) = $700K USD payment (estimate), Reality, more like ‘60/40’ taxation per USD.

The payee then obtains receipt of tax withheld payment for tax filing puposes - as well as any ‘handling’ fees paid…

54

Ok, so I gather that the existing Coinbase account it currently not a non-profit account? Is it under an individual’s name instead of Haiku? Who, exactly, would bear the brunt of taxes if the Bitcoin were sold or sent out of that account? If the current value of the amount of Bitcoin (currently about $75,000 you say?) were sold or sent out of that account, what would the taxes be on it? What was the basis (value) of those donations at the time of being received?

So you’re saying that trying to set up a completely NEW Institutional (non-profit) account (not trying to CONVERT the existing account into one), is inordinately complex and convoluted? Maybe try to set up one on PayPal or elsewhere? PayPal is supposedly now (or soon going to be) allowing Crypto in and out of PayPal. This would mean you could send the crypto from Coinbase to PayPal.

But I definitely think you need to stop accepting crypto donations until Haiku has a way of dealing with them. It’s just making the black hole bigger, if you don’t. But I’d definitely try and get this thing sorted out before the next peak (2025), because any tax implication is going to be infinitely worse when Bitcoin is worth a LOT more then.

Find out what the tax would be for the given individual responsible for the Haiku account, if the Bitcoin were sold at, say, $75,000. But knowing the basis (original value) is also critical. Node40 can help immensely in this regard. It costs about $35 to get their Essential tier, which will produce the proper tax forms you need.

55

Typically if the Bitcoin is donated to haiku, it can be done without the capital gains taxes, if it’s given as unrealized gains.

56

Gains (sold value is above the basis value) or Losses (sold value below the basis value) are only realized AFTER you’ve sold a given thing. As long as they (Haiku/whomever) hold the Bitcoin or other crypto (and don’t convert it or move it), it’s all unrealized. I’ve now got 10% of 1 Bitcoin between Coinbase and PayPal. We just finished our taxes (finally!) and thankfully our expenses and donations and such always help offset our income, so we don’t owe much (about $2K overall). But,while I report (through Node40’s tax forms) what I’m accruing, none of it will count until I actually sell it, which I’m not going to do until the next peak.

I would GLADLY pay whatever taxes I owed on 3+ BTC (once sold), if I had it. Who cares what was left afterwards… it would be pure profit to me! Even if I sold my 1/10th of 1 Bitcoin at the peak, I’m still coming out ahead. But I plan to accrue as much BTC as I possible can before then, however it comes.

“HODL til you waddle!”, as I say! :grin:

Let’s say Bitcoin (at the next peak) goes to $100K, like some are predicting. Let’s say the Bitcoin Haiku is holding is worth $300K at that point and they sell it. Let’s assume you have to pay 50% of it. You (whoever) walk away with $150K, free and clear the following tax year! How much time, to how many developers, for Haiku could that fund? This is assuming the tax situation were never resolved and SOMEONE has to bear the tax burden on that money. Gah! I’d LOVE to be in that position! Pick Me! I’ll gladly take a $5K-$10K as a “handler’s fee” for that burden! Haiku would still be $140K ahead at the end of the day. But the problem is… the person in charge has to pay the tax the following tax year (not the person who GETS the Bitcoin, until they sell their BTC), so, ideally, you’d want to sell the Bitcoin at the peak and then pay the taxes on it the year after. Fortunately, this wouldn’t be long, because the 1st and 2nd peak occured in Dec. of 2013, and 2017. The 3rd peak occured in Nov. 2021. So we have a small, roughly 1 month “window” variance. But you sell at the very end of December 2025, if you choose to hold out that long, so you only have 4 months before you declare your profit, in April of 2026. We still have a few years before the next peak, but making sure you’re in the clear before then, is what we’re trying to get squared away right now.

This whole discussion is to how best to benefit Haiku with it’s BTC. We should all be involved, to help Haiku. Doing everything we can to see this through to the most beneficial conclusion. Whether one believes in crypto or doesn’t, is irrelevant. The majority (Whales and others) have made digital 1’s and 0’s a goldmine of value, at certain times of the 4 year cycle… and Bitcoin is the lead dog of them all! So, it is quite likely, when Bitcoin goes up, most others will do exactly likewise. And when Bitcoin goes down, so do the rest. Just like a dog sled team. But, in THIS dog race, you want to sell ALL your dogs at the top of the mountain, before they start going down the other side again! :grin:

57

As a small note, not sure who is “in” on news about Coinbase, but there’s been some rough waters, concerning some wording Coinbase has used concerning what could happen in case of a bankruptcy. And the concern is that user funds could be frozen and held indefinitely or considered corporate funds or something. It could just be people over-reacting, but if what they’re concerned could happen, ever DID happen… bye-bye Bitcoin for Haiku. Theoretically.

Also saw this and wondering if this is hinting at the writing on the wall…

58

typically when companies start creating difficult process to restrain people from clearing assets they hold. it is because they are insolvent or overleveraged. Look to Enron for the last example. If I were the haiku team, I would just tell whoever it is to sell the BTC, pay taxs from proceeds and donate the remainder to haiku and get on with it. Coinbase has made it clear, they do not want you to get your $$$ they have it and they refuse to hand it over.