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I had some cryptocurrency with an unrealized capital loss that I gave to someone as a gift.

My adjusted cost basis just before I made the gift was $4,000.

The fair market value (FMV) of the cryptocurrency at the time I made the gift was $1,500.

Under United States federal and Connecticut state tax law, may I claim a capital loss, and if so, how much?

1 Answer 1

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No, you cannot, because you didn't lose any money. You gifted it away. The donee can claim capital loss based on the FMV or gain based on your cost basis (see the rules on the IRS site).

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    Thank you, but how do you know I didn't realize my unrealized capital loss on the date that I made the gift?
    – ma11hew28
    Apr 14, 2022 at 13:22
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    You only realize gains or losses on a sale or exchange, not on a gift. You can't just "decide" to realize a loss. See irs.gov/publications/p544#en_US_2021_publink100072605 Apr 14, 2022 at 13:36
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    Had you sold the cryptocurrency and then gifted the money, then you'd get to realize the loss. Since you didn't - you don't.
    – Joe
    Apr 14, 2022 at 15:35
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    @DavidSchwartz no, not for losses it doesn't. The difference between FMV and the cost basis doesn't provide any tax benefit to the beneficiary.
    – littleadv
    Apr 14, 2022 at 21:32

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