# How to calculate cost basis for cryptocurrency gift?

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?

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.

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.
``````