Gift Tax Preparation – Form 709 Service

Description

You Gifted Crypto. Now You Need to Report It.

If you transferred more than $19,000 in digital assets to anyone in 2025, you’re required to file Form 709 with the IRS. This is true even if you don’t owe any gift tax.

Most people skip this filing because they assume no tax owed means no paperwork required. That’s wrong, and it can cause problems for decades.

Why the IRS Cares (Even When You Don’t Owe Anything)

Form 709 is how the IRS tracks your lifetime gift tax exemption (currently over $13 million). Every time you gift more than the annual exclusion amount, you’re supposed to report it so the IRS can keep a running tally of how much exemption you’ve used.

If you don’t file, you haven’t started the statute of limitations clock. The IRS typically has three years to audit a return. But if there’s no return? There’s no clock. They can come back in 20 years, challenge your valuation, and assess penalties on a gift that’s appreciated by 10x since you made it.

Filing Form 709 locks in the value and closes that window.

Crypto Makes This Messier

Valuation is the core problem. You have to report the fair market value at the exact moment of transfer. Bitcoin swings 10% in a day sometimes. If you report the wrong number, that’s a problem you might not hear about until years later. You need documentation that holds up.

Gifts to Individuals

This is the simplest case. You send your nephew 2 ETH worth $25,000, you file Form 709. No tax owed (assuming you haven’t burned through your $13 million lifetime exemption), but you still report it.

One thing people miss: if you’re married, you can split gifts with your spouse. That doubles your annual exclusion to $38,000 per recipient. But you have to file Form 709 to make that election, even if the split gift falls under the combined threshold.

Gifts to a Trust

Two things trip people up here beyond the valuation issue.

First, the “present interest” vs. “future interest” distinction. The $19,000 annual exclusion usually only applies when the beneficiary can access the gift right now. Many trusts don’t work that way. If your trust is structured so beneficiaries get the money later, that $19,000 exclusion might not apply at all. You could be required to file Form 709 starting from dollar one.

Second, if your trust uses Crummey powers to qualify for the annual exclusion, the timing of those withdrawal notices matters. Miss the window and the exclusion disappears.

Gifts to an LLC

This gets weird. The IRS looks through the LLC to the underlying owners. If you gift crypto to an LLC owned by your kids, you’ve just made a gift to your kids. The LLC structure doesn’t change the reporting requirement.

Where it gets complicated is valuation discounts. Some people gift LLC membership interests (rather than the crypto directly) because minority interests in an LLC can sometimes be valued at less than the underlying assets. A 10% interest in an LLC holding $1 million in Bitcoin might be valued at $85,000 instead of $100,000 because the recipient can’t control the LLC or easily sell the interest.

The IRS scrutinizes these discounts heavily. If you’re going this route, you need an appraisal and you absolutely need to file Form 709. This is not a “see if they notice” situation.

Gifts to Charity

Different rules. Charitable gifts aren’t subject to gift tax, so no Form 709 required. But you’ll want documentation for your income tax deduction, and the valuation rules for donated crypto are strict. Over $5,000 and you typically need a qualified appraisal.

Gifts to a Spouse

Generally unlimited and tax-free if your spouse is a U.S. citizen. No Form 709 needed. If your spouse isn’t a citizen, there’s a higher annual exclusion ($185,000 in 2025) but you do have to track it.

What This Service Provides

Digital Ascension Group works with a team of tax professionals to handle your Form 709 preparation for crypto gifts. They’ll document valuations properly, track your lifetime exemption usage, handle split-gift elections for married couples, and review Crummey letter timing if your trust uses those. For LLC gifts, we work with appraisers to establish defensible discount valuations.