How Crypto Gifts Are Taxed

Crypto tax can get a little tricky when it comes to gifts. We explain how taxes work for both giving and receiving gifts of cryptocurrency.

Andrew Perlin
ByAndrew Perlin, CPAUpdated on May 3, 2022 · minute read

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Key Takeaways

  • You only recognize taxes on crypto gifts when you sell or otherwise dispose of the gifted asset.

  • It is important to determine the giver's cost basis for the asset, as it transfers to the recipient. If you don't know this information, you will have to use a $0 cost basis.

If you receive crypto as a gift (cool!), receiving the crypto alone is not a taxable event, and you don’t recognize it as income. Rather you realize capital gains or losses on crypto when you sell it. 

  • If you sell the asset for a gain (i.e. more than the giver’s cost basis), then your cost basis for that sale is equal to the donor’s basis. 

  • If you sell the asset for a loss (i.e. less than the giver’s cost basis), then your cost basis is the lesser of either the donor’s cost basis or the fair market value at the time you received the crypto. 

  • If you don’t know the giver’s cost basis, then you must recognize $0 cost basis for the sale.

Your holding period (to determine short / long term crypto tax rates) includes the holding time of the person who gave you the crypto. If you don’t know when they acquired the crypto, your holding period begins when you receive the gifted crypto.  

If you give a crypto gift to someone, then it is not a taxable event. However, make sure that they know your cost basis of the asset that you are giving to them. 

Be sure to includes gifts into your cryptocurrency tax software account, as it's necessary to account for assets received or given.

Tax deductions for crypto donations

If you donate crypto to a 501(c)(3), then you are not liable for tax on the asset, and you can have a charitable deduction.

  • If you held the crypto given for over a year, then the deduction amount is equal to the fair market value of the crypto given.

  • If the crypto is held for under a year, then the deduction amount is the lesser of the crypto’s cost basis or fair market value.

For more info on crypto tax basics, visit our Crypto Tax Guide.

To stay up to date on the latest, follow TokenTax on Twitter @tokentax.

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Andrew Perlin
Andrew PerlinAccounting at TokenTax
Andrew Perlin is a CPA specializing in crypto taxes. After working as a financial controller, he co-founded CryptoCPAs, which was acquired by TokenTax in 2018.

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