How does gifting cryptocurrency affect the cost basis?

3 answers

• Dec 18, 2021 · 3 years ago
  When you gift cryptocurrency to someone, the cost basis of the gifted cryptocurrency is transferred to the recipient. This means that if the recipient decides to sell the gifted cryptocurrency in the future, they will use the original cost basis to calculate their capital gains or losses. It's important for the recipient to keep track of the date and value of the gifted cryptocurrency, as this information will be needed for tax purposes. Additionally, if the recipient holds onto the gifted cryptocurrency for at least one year before selling, they may qualify for long-term capital gains tax rates, which are typically lower than short-term rates.
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• Dec 18, 2021 · 3 years ago
  Gifting cryptocurrency can have tax implications for both the giver and the recipient. As the giver, you may be subject to gift tax if the value of the gifted cryptocurrency exceeds the annual gift tax exclusion limit. However, the recipient will not owe any taxes at the time of the gift. The tax liability for the recipient arises when they decide to sell or dispose of the gifted cryptocurrency. At that point, they will need to calculate their capital gains or losses using the cost basis of the gifted cryptocurrency.
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• Dec 18, 2021 · 3 years ago
  When you gift cryptocurrency, you're essentially transferring ownership of the digital asset to someone else. From a tax perspective, this transfer triggers a taxable event for the giver. The giver will need to report the gift on their tax return, but they won't owe any taxes unless the value of the gifted cryptocurrency exceeds the annual gift tax exclusion limit. As for the recipient, they will inherit the cost basis of the gifted cryptocurrency. This means that if they sell the cryptocurrency in the future, they will use the original cost basis to calculate their capital gains or losses.
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