Your holding period for virtual currency that you received as a gift includes the time that the virtual currency was held by the person from whom you received the gift. However, if you do not have documentation substantiating that person’s holding period, then your holding period begins the day after you receive the gift.
This means that if you can prove how long the donor held the virtual currency before giving it to you, you can add that time to your own holding period. If you cannot provide such documentation, your holding period starts the day after you receive the gift. This is important for determining whether any gain or loss on the sale or exchange of the virtual currency is considered short-term or long-term. If you hold the virtual currency for one year or less, it is a short-term capital gain or loss; if you hold it for more than one year, it is a long-term capital gain or loss.
Sources:
Notice 2014-21
Rev. Rul. 2019-24
