Making a Killing in Cryptocurrency? There’s a Tax on That

If you sell it, capital gains (or losses) kick in, and if you gift or inherit a lot of it, the IRS might want a piece of the action.

Coins representing cryptocurrency are piled up next to a computer keyboard.
(Image credit: Getty Images)

The number of people investing in cryptocurrency in recent years seems to be ever-increasing. Several years ago, almost no clients came to us with cryptocurrency in their portfolios. These days, even retirees seem to have it in their portfolio. In our previous article, we talked about generally considering cryptocurrency in your estate plan. This time, we’re going to be talking about the general estate and gift tax implications of cryptocurrency, as well as cryptocurrency reporting and valuation issues. 

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Tracy Craig, Fellow, ACTEC,  AEP®
Partner and Chair of Trusts and Estates Group, Seder & Chandler, LLP

Tracy A. Craig is a partner and chair of Seder & Chandler's Trusts and Estates Group. She focuses her practice on estate planning, estate administration, prenuptial agreements, guardianships and conservatorships, elder law and charitable giving. She works with individuals in all areas of estate and gift tax planning, from testamentary estate planning and business succession planning to sophisticated lifetime leveraged gifting techniques, such as grantor retained annuity trusts (GRATs), intentionally defective grantor trusts, family limited liability companies and qualified personal residence trusts (QPRTs). Tracy serves in various fiduciary capacities, including trustee and personal representative (formerly known as executor). She also works with clients on issues facing elders.