How crypto gifts are treated for US taxes
Giving crypto is not a taxable sale and receiving it as a gift is not income, but a large gift may trigger US gift tax and a return to the IRS.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
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- You cannot deduct a personal crypto gift.
- Paying someone in crypto is income to them.
- The recipient does not report the gift as income.
- Keep records of the donor's basis and gift date value.
You will gather the gift date, the US dollar value, and the donor's basis. The giver and recipient have different reporting duties.
What is the tax treatment of crypto gifts?
The IRS treats digital assets as property. Giving crypto away is not a sale, so the giver does not owe capital gains tax just for the gift. The recipient does not treat the gift as taxable income.
How do you handle a crypto gift?
The giver and recipient have separate tasks, and both need the same numbers. Basis is generally what the donor paid in US dollars. Work through the steps in order.
- 1Gather the gift detailsWrite down the asset type, gift date, number of units, US dollar fair market value on that date, and donor's basis.
- 2Check the annual exclusionIf you gave the crypto, compare the gift value with the annual exclusion for that year. A gift above the exclusion may require a gift tax return unless an exception such as the marital or charitable deduction applies.
- 3Do not deduct the giftYou cannot deduct a personal crypto gift. Paying someone in crypto for work is income to them.
- 4Pass on the basisThe recipient generally keeps the donor's basis and holding period for gain. For a loss, the basis is the lower of the donor's basis or the fair market value on the gift date.
- 5Answer the digital asset questionOn your federal return, answer Yes or No about digital assets. A giver who transferred ownership checks Yes.
What records and reporting come later?
When the recipient sells, they report a capital gain or loss. The basis and holding period come from the gift rules. Keep records that support your return.
Frequently asked questions
For a loss, your basis is usually the lower of the donor's basis or the fair market value on the gift date. A sale price between those two amounts usually produces no gain or loss.
Receiving a crypto gift is not taxable income, so the recipient usually does not report the gift itself. A later sale is reported on the recipient's return.
A US recipient of a large gift from a foreign person may need to file an information return. Gift tax rules also differ for a non-US donor.
