Crypto Inheritance Step-Up Basis Calculator

About the Crypto Inheritance Step-Up Basis Calculator

When you inherit cryptocurrency, the tax basis is generally reset to the fair market value (FMV) at the decedent's date of death. That means unrealized capital gains from the original owner's holding period are usually wiped out for the heir.

For example, if the decedent purchased Bitcoin at $1,000 and it was worth $60,000 at death, the heir's basis is usually $60,000 rather than $1,000. If the heir sells immediately at that value, the capital gain is zero.

This calculator estimates the stepped-up basis, the gain eliminated, and the heir's later tax if they sell at a different price. It is an educational worksheet, not estate or tax advice.

When This Page Helps

Understanding step-up basis matters for estate planning and for heirs deciding whether to sell inherited crypto or keep holding it. This calculator quantifies the gain eliminated and helps compare different sale-price scenarios.

How to Use the Inputs

1. Enter the decedent's original cost basis for the cryptocurrency.
2. Enter the fair market value at the date of death.
3. Enter the sale price or FMV scenario you want to test.
4. Enter the applicable capital gains tax rate.
5. Review the stepped-up basis and eliminated gains.
6. Compare the heir's tax if they sell at the tested price versus the tax without the step-up.

Example Calculation

Tips & Best Practices

• The step-up can apply to crypto held in many types of wallets, including exchange, hardware, and self-custody setups.
• Document the FMV at the exact date of death using a reliable exchange or pricing source.
• An alternate valuation date may be available in some estates, but that is an estate-tax election that requires professional advice.
• The step-up eliminates gains but can also erase losses that occurred before death.
• Estate tax may apply if the total estate exceeds the exemption in force for the estate-tax year involved.

How the Step-Up in Basis Works

The step-up in basis resets the cost basis of inherited assets to their date-of-death fair market value. For cryptocurrency that has appreciated dramatically, that can eliminate a large embedded capital gain.

Estate Planning With Crypto

The step-up is one reason estate planners compare lifetime gifts with bequests at death. Gifting appreciated crypto often transfers the old low basis, while an inheritance can reset the basis.

Practical Steps for Heirs

Document the FMV of inherited crypto at the date of death as soon as possible. If you later sell, that documented number becomes the starting point for the heir's capital-gain calculation.

Frequently Asked Questions

• What is the step-up in basis for inherited crypto?

  Inherited cryptocurrency generally receives a new basis equal to the fair market value on the date of death. That resets the tax starting point for the heir.

• How is this different from gifted crypto?

  Gifted crypto usually carries over the donor's basis. Inherited crypto usually gets a stepped-up basis to date-of-death value instead.

• What if the crypto lost value before the owner died?

  If the crypto was worth less at death than the original purchase price, the basis is generally stepped down to the lower FMV. The heir usually cannot claim the loss that occurred during the decedent's lifetime.

• How do I determine the FMV at the date of death?

  Use a documented price from a major exchange or a well-known pricing source for the relevant date and time. Keep the documentation with the estate records.

• Does the step-up apply to all inherited crypto?

  It generally applies to inherited property, including cryptocurrency, but estate administration details can matter. Use professional advice for unusual custody or trust structures.

• Could the step-up rule change in the future?

  Various proposals have been introduced to modify or eliminate the step-up in basis. Estate-planning decisions should be checked against the rules in force when the estate is actually administered.