Gifting, Donating & Inheriting Crypto: The Tax Rules

Short answer: Crypto can change hands without a sale, but each route has its own basis rule. A gift is not a sale for the giver, yet the recipient inherits the giver’s cost basis and holding period – document both, or the IRS may treat basis as zero. Donating crypto held over a year to a qualified charity can let you deduct fair market value without paying gains tax. Heirs generally receive a stepped-up basis under section 1014.

Gifting, donating and inheriting are three legal ways crypto changes hands without a sale – and the paperwork each one needs is what protects you.

What happens when I gift crypto?

Gifting: giving crypto is not a sale, so the giver realizes no gain. But the recipient inherits the giver’s cost basis and holding period (carryover basis) – document both at the time of the gift, or the recipient may be taxed as if basis were $0. Large gifts may need Form 709 (2026 annual exclusion applies per recipient – check the current figure). How long you held matters – see our guide to short- and long-term capital gains.

What happens when I donate crypto?

Donating: giving appreciated crypto held over a year to a qualified charity generally lets you deduct fair market value without paying capital gains on the appreciation – often better than selling and donating cash. Donations over $5,000 usually need a qualified appraisal and Form 8283.

What happens when I inherit crypto?

Inheriting: heirs generally receive a stepped-up basis to the value at the date of death, erasing the built-in gain – one of the most valuable rules in US crypto tax. Keep the estate’s valuation records; they become the heir’s basis proof. None of this is estate planning advice: for material amounts, a professional should structure it.

Frequently asked questions

Do I pay tax if I gift crypto?

Giving crypto is not a sale, so the giver realizes no gain. But the recipient inherits the giver’s cost basis and holding period (carryover basis) – document both at the time of the gift, or the recipient may be taxed as if basis were $0. Large gifts may need Form 709.

Is donating crypto better than donating cash?

Giving appreciated crypto held over a year to a qualified charity generally lets you deduct fair market value without paying capital gains on the appreciation – often better than selling and donating cash. Donations over $5,000 usually need a qualified appraisal and Form 8283.

What is a stepped-up basis for inherited crypto?

Heirs generally receive a stepped-up basis to the value at the date of death, erasing the built-in gain – one of the most valuable rules in US crypto tax. Keep the estate’s valuation records; they become the heir’s basis proof.

Related guides

• How Crypto Is Taxed in the US: The Complete 2026 Beginner’s Guide
• Short-Term vs Long-Term Capital Gains: Why the 1-Year Line Matters
• Crypto Tax-Loss Harvesting: How It Works & the Wash Sale Question

Sources

• IRS Publication 559 – survivors, executors, and administrators.
• IRS Form 709 – gift tax return (gift tax FAQ).
• IRC section 1014 – basis of property acquired from a decedent.

This guide is general education only – not tax, legal or financial advice. Verify with the source authority and a qualified tax professional before filing.