How does the tax treatment of cryptocurrency gifts differ for the giver and the receiver?

1 answers

• Madhavi PichukaAug 05, 2020 · 5 years ago
  The tax treatment of cryptocurrency gifts differs for the giver and the receiver. For the giver, gifting cryptocurrency is considered a taxable event and they may be required to pay capital gains tax on the appreciated value of the cryptocurrency at the time of the gift. It's important to accurately calculate the cost basis of the gifted cryptocurrency to determine the taxable gain. On the other hand, the receiver's tax treatment depends on how they use the gifted cryptocurrency. If they hold it as an investment, they will be subject to capital gains tax when they sell or exchange it. However, if they use the cryptocurrency for personal transactions, they may need to report the fair market value of the cryptocurrency as income at the time of the gift. It's recommended for both parties to consult with a tax professional to ensure compliance with the tax regulations in their jurisdiction.
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