Q: Can I gift cryptocurrency bought with a personal loan to my daughter in NC?
I live in North Carolina, and I'm married. In 2023, I took out an individual loan of $20,000 in my name only to purchase cryptocurrency. I would like to gift this cryptocurrency to my daughter. There are no specific terms in our marriage regarding financial decisions, and I have primarily managed our financial obligations due to my creditworthiness. I have not discussed this transfer with my spouse and I'm unsure about the ownership rights or implications of transferring cryptocurrency that was purchased with a loan solely in my name. Can I gift the cryptocurrency to my daughter, considering these circumstances?
A:
The IRS allows you to gift up to a certain annual exclusion amount per person without incurring federal gift tax. For 2024, that amount is $18,000, and for 2025 that amount is $19,000. If the cryptocurrency's value exceeds this, you'll need to file Form 709, but you might utilize your lifetime gift tax exemption. The recipient of the cryptocurrency generally does not owe gift tax, but they will be liable for capital gains tax if they later sell the cryptocurrency.
Even if the loan is in your name, North Carolina is an equitable distribution state. This means that assets acquired during the marriage could be considered marital property, even if held in one spouse's name. So even if the loan is solely in your name, the cryptocurrency aquired from that loan, could be considered marital property. Therefore, gifting a significant asset without your spouse's knowledge could potentially lead to legal complications in the event of a divorce or other legal proceedings.
It is strongly recommended that you consult with a qualified tax professional and a family law attorney.
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