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Crypto Gifts and Donations: Basis and Holding Period

Short answer: The IRS FAQ says that if you receive virtual currency as a bona fide gift you have no income until you sell or otherwise dispose of it. For the recipient, the basis for a gain is the donor's basis (plus any gift tax the donor paid); for a loss it is the lesser of the donor's basis or the fair market value when received; with no documentation of the donor's basis, the basis is zero. The holding period includes the donor's holding time, unless you can't document it, in which case it starts the day after you receive the gift.

Donating to charity

If you donate virtual currency to a charity described in section 170(c), you don't recognize income, gain or loss from the donation. The deduction is generally the fair market value if you held the crypto more than one year; if you held it one year or less, it is the lesser of your basis or its fair market value (FAQ 34-35). Donor acknowledgment and Form 8283 signature rules are in FAQ 36-37 (Pub. 1771 for substantiation).

Giving a gift

The IRS Digital assets page says a gift in the form of digital assets is reported on Form 709 (gift tax return) where required. Whether the donor recognizes gain on a gift isn't addressed in the pages we read.

Made-up example

A relative gives you coins with a basis of $2,000 when worth $5,000. You later sell for $6,000: gain $4,000 (donor's basis). If you instead sell for $1,500, your basis for the loss is the lesser of $2,000 or $5,000, so $2,000, and the loss is $500. If you sell for $3,000 (between the two), the IRS FAQ's dual-basis wording results in neither gain nor loss (our reading; confirm with Pub. 551).

Records

Keep the donor's cost, date acquired and any gift tax paid, so you can prove basis and holding period.

FAQ

Is a gift between spouses different? Not covered here.

Does the 1099-DA apply to gifts? Not covered here.

What we could not verify

• The IRS FAQ Part I applies to transactions before January 1, 2025; Part II (2025 onwards) was not read.
• The "neither gain nor loss" middle case: our reading of Pub. 551, which we did not read.
• Gift tax exclusion amounts and Form 709 rules for 2026-2027 (not read).
• Whether brokers report gifts or donations on Form 1099-DA.

Sources (official)

• IRS, Frequently asked questions on virtual currency transactions (page last reviewed or updated June 30, 2026) — https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions (read October 17, 2026; Part I, FAQs 1-46, which the IRS says generally applies to transactions completed before January 1, 2025)
• IRS, Digital assets (page last reviewed or updated September 2, 2026) — https://www.irs.gov/filing/digital-assets (read in full October 17, 2026)

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Not tax advice. Examples use made-up figures. Nothing here has been reviewed by a tax professional. We may earn commissions from affiliate links where marked; see the disclosure.