Crypto gifts: preserve the donor’s records

Describe why the transfer happened

A genuine gift is not the same as payment for services, a promotional reward or a purchase. Keep a written record of the donor, recipient, units and date. The donor may have gift-tax reporting obligations; that does not mean the recipient automatically owes income tax on receipt.

Gift basis is not always the receipt-day price

The donor’s adjusted basis, fair market value at the gift date and any relevant gift tax can matter. When the value is below the donor’s basis, different rules can apply when calculating a later gain versus a later loss. Do not replace missing donor records with a convenient market quote.

Send the records with the coins

Include acquisition dates, basis, gift-date valuation and the transaction hash. The recipient will need the facts when selling or exchanging the asset.

• Record whether the transfer was a gift without compensation.
• Retain donor acquisition evidence.
• Review Form 709 obligations with the donor’s adviser.

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