What tax basis do heirs get for inherited bitcoin in the US?
Under IRS rules, inherited property generally takes its value at the date of death as its basis. What that means for bitcoin, and who sets the number.
Published 3 min read
In short
IRS Publication 551 says the basis of inherited property is generally its fair market value at the date of the owner's death, or on the alternate valuation date if the estate's personal representative chooses it. The IRS treats digital assets such as bitcoin as property, so the same rule applies.
Since the 2025 edition, Publication 551 also points to section 1014(f): the heir's basis in certain property must be consistent with its value as finally determined for estate tax purposes, and a penalty may apply for reporting a higher basis. The executor is the source of the date-of-death value.
When someone sells bitcoin, the taxable gain is the sale price minus the basis, usually what they paid. For inherited bitcoin, the heir paid nothing, so the question is which number the law uses instead. In the United States the answer is set out in IRS Publication 551, Basis of Assets.
What is the general rule?
Publication 551 says the basis of property inherited from a decedent is generally one of the following:
| Situation | Basis |
|---|---|
| Ordinary case | Fair market value at the date of death |
| The personal representative elects alternate valuation | Fair market value on the alternate valuation date |
| No federal estate tax return required | Can be the appraised value at the date of death for state inheritance or transmission tax purposes |
| Appreciated property the heir or the heir’s spouse gave the decedent within one year before death | The decedent’s adjusted basis just before death, not fair market value |
The IRS’s digital assets page explains that digital assets are treated as property for federal tax purposes, so bitcoin follows the same basis rules as other inherited property.
What changed in the 2025 edition?
Publication 551 (Rev. December 2025) refers to section 1014(f) of the Internal Revenue Code: the basis of certain property acquired from a decedent must be consistent with its value as finally determined for federal estate tax purposes. The IRS’s frequently asked questions on gifts and inheritances add that an accuracy-related penalty may apply if someone selling certain inherited property uses a basis higher than its final estate tax value, and that heirs should ask the executor of the estate for the value.
What happens when the heir sells?
The heir’s gain or loss is the sale price minus the inherited basis. If bitcoin is sold soon after the date of death at about the same price, there is little gain or loss to report. If its price has moved, the difference is a capital gain or loss for the heir. Publication 551 deals with basis; how the sale itself is reported, and the holding period rules for inherited property, are covered in the IRS’s instructions for reporting sales of capital assets.
Who sets the value for bitcoin?
The executor, or personal representative, establishes the date-of-death value as part of administering the estate. For bitcoin that usually means recording the price at the date of death from a stated, consistent source, along with the quantity held. Heirs then use that value as their basis.
Practical points that follow from the rules:
- Keep the record. The date, the quantity, the price source and the resulting value should be written down and kept with the estate papers.
- Do not guess later. A basis reconstructed years afterwards is harder to defend than one recorded at the time.
- Self-custody does not change the tax. Whether the coins were on an exchange or in cold storage, the basis rule is the same. What differs is whether the heirs can reach the coins at all; see leaving bitcoin to your family.
This page explains the general federal rule as the IRS states it. Estate and inheritance taxes, state rules and individual circumstances vary, and a tax professional who knows the estate is the right person for advice.