1

USA Taxes. Here are two possible scenarios:

  1. Purchase price is known.

    • Jan 10, 2020 my brother purchases $1,000 worth of crypto (let’s say BTC).
    • Jan 15, 2020 my brother gives me all that crypto (but it’s already worth $1,200 since 5 days passed).
    • Jan 20, 2020 I sell all that and get $1,500

    Question: do I treat Jan 10 or Jan 15 as my cost basis?

  2. Purchase price is unknown

    • Jan 10, 2020 my friend has $1,000 worth of crypto. He doesn’t remember how much he paid for it. All that BTC came from multiple exchanges to his phone wallet... So it’s a mess to figure out the cost basis. He decides to give it to me as a gift.
    • Jan 15, 2020 my friend gives me all that crypto (but it’s already worth $1,200 since 5 days passed).
    • Jan 20, 2020 I sell all that and get $1,500

    Question: Am I allowed to treat Jan 15 as my cost basis? There is no way my friend can give me a good cost basis estimate anyway.

I assume the gift giver has nothing to worry about since this is below $15,000?

2

Cost basis follows a gift. The date of the gift is only used for valuation if a gift tax were due, but as you noted, if it's under $15,000, this is not an issue.

Scenario 1 has a basis of $1000.

Scenario 2 is tricky. For a stock, one would try to get an honest estimate of the purchase date, and look up the range of prices for the given year. Given that even a few years ago, the crypto might have been worth pennies, an argument could be made that, absent any paper trail, any record at all, to use $0.

-3

It is $1,200 in any scenario!!! Crypto should be treated like stock for tax purposes. The donor gives you an asset worth $1,200. This is your cost basis.

A quote from Schwab website

        the value of a gift of stock for gift tax liability is NOT the 

donor's cost basis,  but rather the fair market value 

of the stock at the time the gift is 
    
    given. 

Read this link

https://www.schwab.com/resource-center/insights/content/how-to-value-a-gift-of-stock

2
  • 4
    That link actually makes it clear that the cost basis for the purpose of capital gains is the donor's own cost basis. Your quote is only about gift tax liability itself. – GS - Apologise to Monica Jan 24 at 15:49
  • Consider - if what you suggest is true - I own Apple, and after splits, my cost basis is $1 per share. If by gifting it, she took on a basis of today’s value, that would be quite the trick. This would happen if she inherited on my death. But not by gifting. – JTP - Apologise to Monica Jan 24 at 20:03

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