Can my dad report the crypto transactions for tax from my account?

[calambacle]

There are 2 cryptocurrency exchange accounts. 1 is under my dad's ID/SSN, and the other is mine which is under my ID/SSN. He bought the crypto and then transferred them to my account. We agreed that all the money was his and he told me what to sell/buy which I made many transactions in my account then transferred almost everything back to his account. In other words, he took control of my account. Does my dad report all the transactions but not me?

[pk · Accepted solution]

While I generally am in  agreement with x2rrm, to the extent  this "investment" is to be treated as a gift;  the post above seems to imply that the son's  trading account was set up based on personal id and not SSN. If that is so then was there a 1099 issued  at the end of the year  ?

BTW -- this same post was discussed in detail earlier in the year  with exact same scenario -- perhaps that was only investigation of "what if" and now it is real-- yes?

What I am getting out of this is that the father has an account and so does the son.  Father made a purchase through his account and transferred the holdings to Son's account. The father used the account ( son's account)-- ( why?) to trade/ buy/sell and when all done transferred the holdings ( original plus profits? ) back to his own account.  Who pays the tax on the gains.

In this  above scenario,  there are three entities involved  -- the IRS ( and the state), the father  and the son  From the IRS standpoint ( taxing authority), it is not important who pays the taxes, but of course they would want if from the person with the highest earnings  ( if the facts and circumstances allow it ).

The problem  here is  (a) it is unclear  the motivation of the father for using his own account to purchase  and then use son'e account to buy/sell -- ( belief or ? )  (b) nor is it clear why the son allowed the father to operate  his ( son's ) account

To me the simplest way to look at it is that this was father's investment, no matter which account used for completing transaction ( since he never gave up control of the investment, even if the son was doing the actual transaction) -- it is no different that a traditional investor using an agent, say at Morgan Stanley, whom he directs  the actions to be taken -- the only difference being that his own SSN is linked all throughout.  ( but I do not believe that rises to labeling this as gift or loan to the son ).  If the son was acting as an agent  ( lending use of his account ) for the father, then all he has to do is to issue a 1099 to the father detailing the  transaction and thus letting the owner of the investment pay the taxes.

That is my view

[x2rrm]

It depends on whose SSN the cryptocurrencies were sold under. If it was yours then the gain/loss is reported under your account. The transfers would be considered as gifts.

[calambacle]

What if my account  was only verified with my name, a ID photo and a face picture? Does it make any different to the SSN?

[x2rrm]

No. The taxability of any investment is based on the SSN of the individual, and not by any substantiating documents.

[calambacle]

When I sold the transferred/gifted crypto, the cost basis would be the value at the time that my dad bought it?

[x2rrm]

below is from the irs website:

Question
What is the basis of property received as a gift?
Answer

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

    The adjusted cost basis to the donor just before the donor made the gift to you.
    The fair market value (FMV) at the time the donor made the gift.
    The amount of any gift tax paid on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

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

    Your basis for figuring a gain is the same as the donor's adjusted basis, plus or minus any required adjustments to basis while you held the property.
    Your basis for figuring a loss is the FMV of the property when you received the gift, plus or minus any required adjustments 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 get a gain, you have neither a gain nor loss on the sale or disposition of the property.

If the FMV 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. If you received a gift after 1976, increase your basis by the part of the gift tax paid on it that is due to the net increase in value of the gift. To figure out the net increase in value or for other information on gifts received before 1977, see Publication 551, Basis of Assets. Also, for figuring gain or loss, you must increase or decrease your basis by any required adjustments to basis while you held the property.

 
Additional Information
Instructions for Schedule D, Capital Gains and Losses HTML
Publication 550, Investment Income and Expenses (Including Capital Gains and Losses)
Category
Capital Gains, Losses, and Sale of Home
Sub-Category
Property (Basis, Sale of Home, etc.)

 i think what it is saying is that when you sold it, if it was a gain the cost basis is what your dad paid for it.
If it was a loss, the basis would be the value on the day you received it.