I got some cryptocurrency as gift from family. when I sell, do I need to report in tax return?

Yes. 

 

To figure out the basis of property you receive as a gift, you must know three amounts:

 

• The adjusted cost basis to the donor 
• The fair market value (FMV) at the time the donor made the gift
• The amount of gift tax paid on Form 709

 

If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property.

 

• Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustment to basis while you held the property.
• Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustment to basis while you held the property

 

NOTE: If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and have a gain, you have neither gain nor loss on the sale or disposition of the property.  

 

If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift.

 

 

Thanks, Coleen. I still don't quite understand how to define base when I sell it to figure out gain or loss. If it is gain when I use adjusted cost basis to the donor, but it is loss if I use FMV at the time the donor made the gift. How do I decide what is the right cost base for me to define gain/loss in tax return. 

Normally investments increase in value after they are purchased. If this is the case, your basis is what they initially paid for it.

Thanks, Coleen. I am wondering the increased value will be treated as 100% capital gain or similar to stock gain/loss. 50% is taxable.

It is treated the same way as stock sales. If there is a gain, the entire gain is taxable.