If I move cryptocurrency from my exchange / account to my wife’s. Can I record this transaction as a gift to her so the correct cost basis is calculated on both ends?

[MirZee]

I am using cointracking.info for calculating my taxes. My wife and I use two separate accounts on cointracking.info and also we have separate exchange accounts / wallets.

I have on occasions transferred coins from my wallet / exchange to my wife’s and wanted to know if I can use the Gift Out and Gift In option of their service to calculate cost basis correctly. When I asked this question to cointracking.info, I got the following response: 

“You have the option to enter the withdrawal as (OUT) gift and the deposit as (IN) gift, however both transactions will then be listed in the respective donation and income report of the tax report with the value at the time of transfer. While this work around ensures correct cost bases for the coin in the new account and taking it out of the purchase pool in the sending account, please ask a tax accountant whether it is legal to then omit the values from the donation and income report in the tax total.”

Given the way they calculate taxes,”. Would it be appropriate for me to use the transaction type as ‘Gift out’ at my end and ‘Gift in’ on my wife’s end and vice versa to calculate taxes. We will be filing taxes jointly. Thank you.

[Carl]

Monies transferred between a married couple is not a reportable transaction. Otherwise, every time one spouse gave the other spouse grocery money, you'd have a bookkeeping nightmare.

The only possible way for such a transaction to be reportable on any tax return, would be if you were filing separate returns, which is the most costly way tax-wise for a married couple to file. But even then, it may not be reportable.

[MirZee]

I agree with you.However, there is no way I can show where the outbound transfer is going or the inbound transfer is coming from, nor can I suggest the money (or crypto ) is spent. We certainly file jointly but not sure how to show these transactions moving from one person’s account to another when there is a withdrawal and a deposit out of nowhere. Any suggestions?

[Carl]

You don't report individual transactions on a tax return. You only report totals. The totals will basically "cancel out" the fact that a transaction occurred at all.
On your joint return there will be shown a total amount of transfers out and a total amount of transfers in. So if $100 is out and $100 is in, they've effectively canceled each other out on the "bottom line" of the joint return.

[elestar16]

Hi Carl,

I also had bought 150$ crypto. later transferred to my wife's account. its price had increased to 200$ during transfer. Sold from her account for 195$.  So technically 45$ gain. But Tax software is not considering this gain. its considering 200$ itself as cost basis on her account and calculating a loss of 5$ when sold at 195$.   if this correct???

[PriceFamily3]

I'm running into this issue as well. Could really use some insight. I have sent money to my wife's account and vise - versa many times. The Gains and Losses Calculations can get really crazy with Crypto. Kind of lost.

[DianeW777]

@PriceFamily3 You need only to determine the cost and selling price of each transaction regardless of which account is used. It boils down to that although Crypto can be somewhat confusing because of all the transactions that take place.

Repurchase is not part of the equation except when the repurchased items are sold at which time the cost basis is needed.  Any gain or loss from actual transfers/sales is reported regardless of what the funds were used for.

• In TurboTax Online you will find Cryptocurrency as a selection under Investment Income
• In TurboTax Desktop you will enter Cryptocurrency as a Stock, Mutual Funds, Bonds, Other, under Investment Income

Be prepared with the following information:

• Service name (examples: Coinbase)
• Asset name (examples: Bitcoin, Ethereum)
• Date of purchase
• Cost basis
• Date of sale
• Sale proceeds

You can do a summary of long term and then short term combinations (long term holding is more than one year, short term holding is one year or less).  Make one entry for each. You can then send the worksheets or statement with Form 8949 after your return is accepted, attached to Form 8453.

• Sale date can be the last date a sale occurred or 12/31/2020
• Purchase date can be 'Various' 

If you are e-filing your tax return, then mail your statements along with Form 8453 to: 

Internal Revenue Service

Attn: Shipping and Receiving, 0254 

Receipt and Control Branch 

Austin, TX 73344-0254

If you need a blank Form 8453, you can download this pdf, enter your address information and check the box for Form 8949 (this form is really just a cover sheet).