A cryptocurrency gift is any transfer of digital assets from one person to another without receiving something of equal value in return. This includes sending Bitcoin, Ethereum, stablecoins, or NFTs to a friend, family member, or anyone else—no strings attached.
Crypto gifts are treated like gifts of property under U.S. tax law. They’re subject to the same gift tax rules as other capital assets such as cash, stocks, or real estate. The Internal Revenue Service expects proper documentation and compliance no matter if you’re sending $100 in Bitcoin to your nephew or transferring $100,000 worth of Ethereum to a trust for your daughter.
Crypto Gift Tax Rules in the U.S.
Crypto gifts under $19,000 in 2025 are exempt from gift tax and reporting. This annual exclusion applies per recipient, per year. If your total gifts to one person exceed this limit, you must file IRS Form 709 Gift Tax Return—even if no tax liability arises.
Form 709 tracks how much of your lifetime gift exemption you’ve used. In 2025, the lifetime exemption is $13.99 million. Gifts over the annual exclusion reduce this total, but you don’t pay tax until your lifetime limit is used up.
Gifts to a U.S. citizen spouse are unlimited and don’t need to be reported. Crypto donations to qualified charitable organizations are also excluded from gift tax and qualify for a tax deduction on your tax return.
Examples
These three scenarios show how gift reporting rules apply in different situations.
- You gift $18,000 in ETH to your adult child in the 2025 tax year—no reporting is needed.
- You gift $22,000 worth of Bitcoin to a friend in 2025—you must file Form 709 to report the $3,000 excess over the $19,000 exclusion.
- You donate $25,000 of Ethereum crypto as a gift to a 501(c)(3) nonprofit—no Form 709 is required. You will not pay capital gains taxes on any capital gain. Furthermore, you’re allowed to claim a charitable deduction for the full fair market value if you held the asset for over one year (see Question 35).
Tax Implications When the Gift Recipient Sells the Gifted Crypto
Receiving a cryptocurrency gift is not a taxable event. However, you must report the gain or loss once you sell or dispose of the gifted crypto. The IRS uses the donor’s original cost basis and holding period to calculate your tax bill.
To qualify for long-term capital gains tax rates, the total holding period must be over a year—including the time the donor held the asset. If not, your sale is taxed at higher short-term (ordinary income) rates. You can review the 2025 rates for capital gains taxes in our Guide to Cryptocurrency Taxes.
How Cost Basis and Loss Limits Work
If the crypto’s value has increased since the donor bought it, you’ll report a capital gain. If the value has dropped, your loss is limited to the difference between the sale price and the crypto’s fair market value on the gift date.
Examples
These examples illustrate how capital gains or losses are calculated when you sell gifted crypto.
- Capital Gain: Your aunt gifted you 1 ETH in 2024. She bought it for $1,500. You sell it in 2026 for $2,200. You report a $700 long-term capital gain ($2,200 – $1,500 = $700).
- Limited Loss: Your cousin gifted you 1 ETH in 2024. He bought it for $2,000. It was worth $1,400 when gifted to you. You sell it in 2026 for $1,200. Your capital loss is $200—not $800—since losses are limited to the drop after the gift date ($1,400 – $1,200 = $200).
To calculate gains accurately, you must know the donor’s cost basis and the crypto’s fair market value on the gift date. Without that documentation, the IRS assumes your cost basis is zero—meaning you’ll owe tax on the full sale amount.
Accurate reporting requires knowledge of IRS rules and crypto-specific nuances. Professional help from a crypto-savvy CPA such as Alpine Mar can help you prevent costly mistakes.
Crypto Gifts From Businesses: Tax Treatment
Businesses cannot use the annual gift tax exclusion as it’s only available to individuals. Crypto transfers from a business to an individual are typically taxed as compensation, dividends, or distributions.
For example, crypto gifted to an employee is taxed as wages. Crypto gifted to an owner or partner may be taxed as a draw or dividend. These transfers require proper reporting and may trigger withholding obligations.
The business must document the fair market value at the time of transfer and report it accurately. Professional tax guidance will help you clarify whether the transaction qualifies as a deductible expense or counts as taxable income.
Cross-Border Crypto Gifts: Tax Implications
If you receive over $100,000 in total gifts or bequests from a nonresident alien or foreign estate in a tax year, you must report it to the IRS using Form 3520. Each gift over $5,000 must be listed separately.
If you received crypto as a gift from foreign corporations or partnerships, the reporting threshold is lower—in 2025 it’s $19,570. Each gift must be reported individually, along with the donor’s identity.
Gifts From Covered Expatriates Trigger a Special U.S. Tax
If you receive a crypto gift from a covered expatriate (a former U.S. citizen who renounced citizenship or a long-term resident who renounced residency), you may owe Section 2801 tax. This tax applies even if the donor or decedent lives outside the U.S. and the transfer isn’t otherwise taxable under regular gift or estate tax rules.
You need to report it on Form 708 and pay the required transfer tax of 40%. The IRS treats these as “covered gifts or bequests” and the U.S. recipient—not the expatriate—has the tax obligation.
Gifting Crypto Abroad
U.S. taxpayers gifting crypto abroad to non-resident aliens need to file Form 709 if the value exceeds the annual exclusion. Furthermore, these gifts may also raise FBAR or FATCA reporting issues if foreign wallets or exchanges are involved.
Gifting Crypto to a Non-Citizen Spouse
If you gift crypto to a spouse who is not a U.S. citizen, the annual tax-free gift limit is $185,000 in 2025. Gifts that exceed this threshold must be reported on Form 709.
Note: The unlimited marital deduction doesn’t apply to non-citizen spouses, even if they reside in the U.S. Tax rules for non-citizen spouses are complex—getting expert tax advice will help you avoid penalties and misclassification.
Required IRS Documentation
The IRS requires accurate documentation for all cryptocurrency gifts to verify tax basis, holding period, and gift intent. Drafting a gift letter is highly recommended to establish the cost basis and support gain or loss calculations when the recipient later sells the asset.
The gift letter should include:
- Names of both the gift giver and the recipient
- A description of the cryptocurrency (name and amount)
- The giver’s original acquisition date
- The giver’s adjusted cost basis
- The date of the gift transfer
- The fair market value on the gift date
- A statement confirming the transfer is a gift with no expectation of repayment
Expert Tip: Use a reputable crypto pricing source to document the fair market value at the time of the gift. Save a dated price snapshot and include it with your gift letter.
Accurate documentation protects both parties during an IRS audit and ensures the gift is reported correctly if it is ever questioned. Both the giver and the recipient should keep copies of the gift letter and all supporting records. A CPA who is experienced with crypto tax compliance can help you ensure your records meet IRS standards.
Tax Planning Strategies for Crypto Gifting
Crypto gifts reduce your taxable estate and shift taxes to recipients in lower brackets. Families often use this strategy for long-term wealth preservation. Timing, structure, and documentation are key—professional guidance makes a difference.
Use the Annual Exclusion to Your Advantage
Each year, you can gift up to the IRS exclusion limit without filing a gift tax return. Over time, this allows you to give significant gifts tax-free to family and friends with no immediate tax consequences. Married couples can double the impact by electing to split gifts, raising the limit to $36,000 per recipient.
Consider Trusts
Trusts offer control and tax efficiency for large crypto holdings. Irrevocable trusts remove crypto from your taxable estate, reduce your financial interest, and protect assets for future generations.
Work With a CPA and Use Crypto Tax Software
Valuation, timing, and compliance are easier to manage with expert CPA guidance, especially for high-value or complex crypto gifts. Crypto tax software helps track cost basis, fair market value, and wallet history. A software implementation service ensures everything runs smoothly and no detail slips through the cracks.
Common Mistakes to Avoid When Gifting Crypto
Avoid these common mistakes to ensure your gift is properly reported and compliant with IRS regulations.
- Missing cost basis details. You must know the donor’s original purchase price and holding period to report capital gains correctly. Without this, the IRS may treat your basis as zero.
- Using the wrong valuation date. Always use the fair market value on the date the gift was transferred—not the date it was agreed on or received.
- Mixing personal and business wallets. Transfers between personal and business wallets must be clearly documented. Without records, the IRS may reclassify the gift as income or compensation.
- Skipping Form 709 or 3520. These IRS forms are mandatory when crypto gifts exceed reporting thresholds. Missing them may lead to audits or penalties.
- Leaving out a gift letter. This document supports your tax reporting and protects both parties if the gift is questioned later by the IRS.
Make Crypto Gifting Smart, Strategic, and IRS-Compliant
Crypto gifting offers powerful tax planning opportunities. It also requires careful handling to avoid costly mistakes. Whether you’re reducing your taxable estate or shifting future gains to loved ones, documentation is everything. It’s essential to always track cost basis, fair market value, purchase and sale dates, and the details of the gifter and receiver.
Working with an experienced crypto CPA enables you to align your strategy with IRS rules and long-term financial goals. Crypto tax software adds efficiency and accuracy, especially for larger crypto transactions. With the right tools and guidance, gifting crypto can reduce your taxes and preserve your wealth over the long term.
