Calculate the stepped-up basis for inherited cryptocurrency. New basis equals FMV at date of death, potentially eliminating all unrealized capital gains.
When you inherit cryptocurrency, the IRS grants a powerful tax benefit: the cost basis is "stepped up" to the fair market value (FMV) at the date of the decedent's death. This means all unrealized capital gains accumulated during the original owner's lifetime are effectively eliminated for tax purposes. If the crypto has appreciated significantly, this can save heirs tens or even hundreds of thousands of dollars in capital gains taxes.
For example, if the decedent purchased Bitcoin at $1,000 and it was worth $60,000 at the date of death, the heir's new basis is $60,000 — not $1,000. If the heir sells immediately at $60,000, the capital gain is zero. This is fundamentally different from gifted crypto, which carries over the donor's original basis.
This calculator computes the stepped-up basis, the capital gains eliminated, and the tax savings from the step-up. It also projects the heir's future capital gain if they hold and sell at a different price. This tool is for educational purposes only and is not tax or financial advice.
Understanding the step-up in basis is crucial for estate planning and for heirs deciding whether to sell inherited crypto. This calculator quantifies the tax savings and helps heirs make informed decisions about holding versus selling. It also helps estate planners compare gifting versus bequeathing crypto. Real-time recalculation lets you model different market scenarios quickly, so you can act with confidence rather than relying on rough mental estimates.
Stepped-Up Basis = FMV at Date of Death Eliminated Gain = FMV at Death − Original Cost Basis Tax Savings = Eliminated Gain × Capital Gains Rate Heir's Gain if Sold = Current FMV − Stepped-Up Basis Heir's Tax = max(Heir's Gain, 0) × Capital Gains Rate
Result: $8,250 saved; heir owes $750 on $5,000 gain
Original basis was $5,000. Stepped-up basis = $60,000 (FMV at death). Eliminated gain = $55,000. Tax savings = $55,000 × 15% = $8,250. If heir sells at $65,000, gain = $5,000 and tax = $750.
The step-up in basis resets the cost basis of inherited assets to their fair market value at the date of death. For cryptocurrency that has appreciated dramatically, this can eliminate enormous capital gains. The heir starts fresh with the death-date value as their basis.
The step-up creates a powerful estate planning tool. Rather than gifting highly appreciated crypto (which carries over the low basis), holding it until death allows heirs to receive it with a stepped-up basis. This strategy is known as the "buy, borrow, die" approach.
Document the FMV of all inherited crypto on the date of death immediately. This establishes your stepped-up basis. If you plan to sell, consider holding for at least one year after inheritance to qualify for long-term capital gains rates on any additional appreciation.
When someone passes away, their cryptocurrency receives a new cost basis equal to the fair market value on the date of death. This "step-up" eliminates all unrealized gains from the original owner's lifetime.
Gifted crypto carries over the donor's original cost basis (carryover basis). Inherited crypto gets a stepped-up basis to FMV at date of death. The step-up is a much more favorable tax treatment for appreciated assets.
If the crypto was worth less at death than the original purchase price, the basis is "stepped down" to the lower FMV. The heir cannot claim the loss that occurred during the decedent's lifetime.
Use the closing price on a major exchange (Coinbase, Kraken, etc.) on the date of death. For less liquid tokens, use a pricing aggregator like CoinGecko. Document the source and price for your records.
Yes, the step-up applies to all inherited property, including cryptocurrency. It applies whether the crypto was in an exchange account, hardware wallet, or DeFi protocol at the time of death.
Various proposals have been introduced to modify or eliminate the step-up in basis, but as of 2025, the step-up remains in effect. Estate planning strategies should account for the possibility of future changes.