#Resolve #BTC #Gifts #IRS
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If you receive a gift or inheritance from someone other than a spouse, you will usually be considered to have acquired it at fair market value. In the future when you sell it, your capital gain or loss will be based on the value of the item when you acquired it.
Tax rules are intentionally vague and ambiguous. That way if the state decides they have a reason to lock you up they can always get you for tax fraud.
It is basically impossible to comply with all the tax legislation unless you are a wage slave.
Only matters if you sell it.
In the US you can “gift equity” to someone and it’s tax-free up to a certain amount over one’s lifetime. I believe the cap is around $14 mil before taxes are due.
I know this is a thing for real estate. I imagine it can be applied to Bitcoin too.
Can’t answer your other questions but I am eager to see others responses regarding IRS reporting and cost basis.
In the US, gifts are taxable to the GIVER. Not the receiver.
Your tax basis is the based on the value at the time you received it.
You pay tax (or take a loss) at the time you sell it, based on the difference between the selling price and your basis (see prior sentence)
Wait… ya pay taxes on Btc???? I’ll pay taxes on Capital gains tax on fiat not my Btc no gracias
>Let’s say I received 1 BTC from someone who bought using an exchange at 40K USD. Do I pay taxes on that BTC as a gift of 40K?
I think you get the same cost basis the gifter would have had if they had kept it. You should go verify that though, should be easy to confirm.
>This taxable event is triggered but how does the IRS know it’s considered a loss?
You tell them it’s a loss when you file your taxes.
>And moreover, if I didn’t have the knowledge of what the gift was valued at, how would I know to report it as realized gains/losses?
You can always list a cost basis of $0.
>Let’s say I received 1 BTC from someone who bought using an exchange at 40K USD. Do I pay taxes on that BTC as a gift of 40K?
If that bitcoin was sent to a newly generated address straight into your private wallet then nobody on earth will know you are the receiving end. And if that someone bought it and sent it to you straight from the exchange, then they are the one associated with the transaction, not you.
Check out form 709.
The exchange reports your name and address to the IRS
Transaction tracking is your responsibility. Reporting gains is your responsibility
Bitcoin and taxes in the same sentence makes me 😢
It’s proper fucking crazy that someone can’t give a gift to someone else without the government taking a piece. Are they gonna start taxing my kids for getting birthday gifts?
Has anyone read The Sovereign Individual?
Just don’t cash out to fiat. The tax is on the fiat conversion
Gift in bitcoin falls under the same regulations as a gift in cash of the fair market value at the time of the gift.
I believe tax software like Koinly just defaults to taxing the entirety of the gift.