Crypto Gifting to Son and CGT - Community Forum (2024)

FAQs

Can I gift crypto to my parents? ›

There aren't usually tax implications for getting crypto as a gift, but this changes as soon as you sell, convert, or dispose of gifted crypto. These are taxable events, and you're responsible for reporting gains and loss, as well paying any capital gains taxes you incur.

If you've received a crypto gift, you'll pay taxes when you sell or otherwise dispose of your cryptocurrency. You may be required to incur capital gains or capital losses depending on how the price of your crypto has changed compared to the original cost basis.

The IRS classifies cryptocurrency donations as property, and it is a non-taxable event when donated, per guidance from the IRS.

If you send cryptocurrency to another person in exchange for goods or services, it will be considered a taxable disposal. You'll incur a capital gain or loss depending on how the price of your crypto changed since you originally received it.

Crypto exchanges, like Coinbase or Kraken, are one of the most straightforward ways to gift crypto. You can buy the coins directly from a crypto exchange and send it to the recipient's digital wallet if they have one. Some exchanges even have digital wallets built within the platform.

Gifting cryptocurrency incurs the same CGT event as though you had sold them - it is an A1 disposal CGT event. You will need to record the disposals the same way as any CGT asset sale on your returns.

Tax Implications For Receiving A Crypto Gift Transfer

Gifts with a value of up to INR 50,000 are tax-exempt. Gifts from relatives with a value exceeding INR 50,000 are tax-exempt. Gifts from non-relatives with a value exceeding INR 50,000 are taxable.

The IRS allows individuals to give away a specific amount of assets or property each year tax-free. For 2024, the annual gift tax exclusion is $18,000, meaning a person can give up to $18,000 to as many people as he or she wants without having to pay any taxes on the gifts.

A Bitcoin address serves as a digital identifier for sending BTC. Users can send Bitcoin by copying the recipient's address or scanning a QR code, following a straightforward process in the Crypto.com App or DeFi Wallet.

What is the cost basis of a Bitcoin gift? ›

Knowing your cost basis

However, if you received crypto from mining or staking, your cost basis is determined by the fair market value when you received it. Your cost basis for gifted crypto will depend on both the basis the person who transferred it to you had and the fair market value when you received it.

As a general rule, giving crypto to someone as a gift is not a taxable event in the US. However, if you surpass the annual gift tax exclusion amount of $17,000 in 2023, you'll have additional reporting requirements. The exclusion amount may change each year as determined by the IRS.

There is no way to legally avoid taxes when cashing out cryptocurrency. However, strategies like tax-loss harvesting can help you reduce your tax bill legally. Converting crypto to fiat currency is subject to capital gains tax. However, simply moving cryptocurrency from one wallet to another is considered non-taxable.

The rate depends on how long you owned the crypto and your income. Short-term capital gains tax rates range from 10% to 37%. Long-term rates can be as low as 0% or as high as 20%. Selling crypto for a loss and moving wallets generally won't generate tax liability, but staking and crypto-crypto trading do.

First, since crypto is digital, sending crypto can be done from anywhere in the world with an internet connection. Second, crypto doesn't have any physical borders like dollars, pesos, or euros, allowing transactions with anyone globally, regardless of their location.

Crypto income is taxed as ordinary income at its fair market value on the date the taxpayer receives it. Here are the most common examples of what is considered crypto income: Receiving crypto as payment for providing a service. Mining crypto and earning rewards.

Cryptocurrency as an Asset in an Estate

Assets can be transferred to an estate. This means that cryptocurrency can now be included in a will or trust, just like any other type of property.