2025 Year-End Tax Strategies for Crypto Investors - Gift Crypto

Gifting Crypto: How to Share Wealth Tax-Free - 2025 Year-End Tax Strategies for Crypto Investors

(Part 5 of the 2025 Year-End Tax Strategies for Crypto Investors series)

In earlier parts of this series, 2025 Year-End Tax Strategies for Crypto Investors, we reviewed how to step up your basis, harvest losses, leverage the wash-sale exception, and donate appreciated crypto for maximum tax savings.

This installment covers another valuable year-end strategy—gifting cryptocurrency to family or loved ones tax-free while staying within annual exclusion limits.

Gift Crypto

Would you like to give some crypto to a child, a grandchild, a spouse, or another loved one? For 2025, you are allowed to gift up to $19,000 to an unlimited number of people without triggering any tax or reporting obligation for you or the recipients.13 If you’re married, you and your spouse may gift up to $38,000 per recipient.

The annual gift tax exclusion is a use-it-or-lose-it opportunity. If you do not make a gift this year, you cannot double your exclusion for 2026.

If your gifts exceed the annual exclusion, you’ll need to file a gift tax return on IRS Form 709. This is an informational return. You won’t have to pay any gift tax unless your total lifetime gifts exceed the lifetime gift tax exemption, which is $13.99 million for 2025 (double that for married couples).

By the way, you do not need to file Form 709 if you gift cryptocurrency or other assets to your spouse.

A gift you make to an individual is not tax-deductible by you, and it is not taxable income for the recipient until the recipient sells or otherwise disposes of it.14

Example. Saul has 0.10 Bitcoin he purchased for $1,500 that is now worth $10,000. He gifts the Bitcoin to his granddaughter. He does not have to pay any capital gains tax on his $8,500 gain. His granddaughter does not have to report any income either. Nor is there an IRS reporting requirement, because the value of the gift is less than $19,000.

Know this. The granddaughter’s basis is $1,500 for determining taxable gain or loss on her sale of the Bitcoin.15

It’s a good idea to draft a letter to the gift recipient that includes the following:

· Names of the gift giver and the recipient

· Description of the cryptocurrency being gifted, including name and amount of each cryptocurrency included in the gift

· Date the giver acquired the cryptocurrency

· Giver’s adjusted cost basis for the cryptocurrency

· Date of the gift

· Fair market value of the gift at the time of transfer

· Statement from the giver that the transfer was a gift to the recipient with no expectation that it be paid back

The gift recipient should keep the letter in his or her tax records.

Stay tuned: additional articles in this series will continue exploring advanced year-end crypto tax planning opportunities.

Contact us today for expert guidance:

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1. IRC Section 1211(b)(1)

2. IRC Section 1212(b)

3. IRS Notice 2014-21

4. Charity Navigator ; Candid (formerly GuideStar)

5. IRC Section 170(f)(18)

6. IRC Section 63(c)(7)

7. IRS Frequently Asked Questions on Virtual Currency Transactions — updated April 23, 2025, Q. 35

8. Ibid.

9. IRS Publication 526, Charitable Contributions (2024) — dated Feb. 26, 2025, p. 15

10. IRS Virtual Currency FAQs — Q. 35

11. Chief Counsel Advice 202302012

12. IRS Virtual Currency FAQs — Q. 36

13. Revenue Procedure 2024-40

14. IRS Virtual Currency FAQs — Q. 32

15. IRC Section 1015

16. IRS Notice 2024-80

17. IRC § 402(g)(1)(B) ; Notice 2024-80

18. IRC § 414(v) ; Notice 2024-80 — For 2025, the $31,500 limit applies to ages 50–59 and 64+.

19. Treasury Decision 10033 — adds an $11,250 catch-up to the $23,500 base = $34,750.

20. IRC § 404(a)(3)(A)(i)(I)

    
    

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