Tax on buying bitcoin for a friend

[Juicymangolover]

Hello,

Newbie here, just registered.

I was having problem purchasing bitcoin, Ethereum and Litecoin from coinbase so I asked my friend to purchase some for me and keep it in coinbase/GDAX (just keep it and not trade) until I receive my Ledger Nano S hardware wallet. He'll transfer them once I get my wallet (I have a blockchain wallet, but I don't want to use that) and I have already paid him for the exact amount that he brought for. He did not sell it to me for any gains. So my question is does my friend have to report his purchase to the IRS after he transfer them to me? I keep a record of all the purchases including the date and time as well as the price, will my basis price be the same price my friend brought at?

Also should I ask my friend to continue keep it on coinbase/GDAX or transfer them to a temporary wallet until my ledger nano s arrive?

Thank you so much!

[odolvlobo]

So my question is does my friend have to report his purchase to the IRS after he transfer them to me?

You generally report sales rather than purchases.

Also should I ask my friend to continue keep it on coinbase/GDAX or transfer them to a temporary wallet until my ledger nano s arrive?

The risk of loss is low, but the effort of transferring to your own wallet is lower. Download a Ledger-compatible wallet and transfer the coins. Then, when you get the Ledger, move the coins to the Ledger.

[LeGaulois]

Yes, your friend needs to report that as well. He will just need to say he bought at $xxx and sold at $xxx (to you). What would be great is if you can sign a paper between both to just to say he sold it to you.  No tax if no gain of course.

If you buy bitcoins on July 12, 2019, the value to consider is the price on July 12, not the day your friend bought the coins. You can't say the bitcoins were your before that because it was your friend

[odolvlobo]

Yes, your friend needs to report that as well. He will just need to say he bought at $xxx and sold at $xxx (to you). What would be great is if you can sign a paper between both to just to say he sold it to you.  No tax if no gain of course.

If you buy bitcoins on July 12, 2019, the value to consider is the price on July 12, not the day your friend bought the coins. You can't say the bitcoins were your before that because it was your friend

Beware of random strangers on the internet giving tax and legal advice.

[LeGaulois]

Yes, your friend needs to report that as well. He will just need to say he bought at $xxx and sold at $xxx (to you). What would be great is if you can sign a paper between both to just to say he sold it to you.  No tax if no gain of course.

If you buy bitcoins on July 12, 2019, the value to consider is the price on July 12, not the day your friend bought the coins. You can't say the bitcoins were your before that because it was your friend

Beware of random strangers on the internet giving tax and legal advice.

Yeah but if you read my post again and if you have already filled a tax paper once in your life you will see that the two points I gave are common and logic for every one used to fill a tax paper. This is basically so evident that there is no need to ask, and no matter the country you come from.
It's not like if I was giving a complex scheme so OP can avoid to pay the due taxes

[dunfida]

One lesson we can learn here is that we really have to be careful with matters on tax as the government is now really watching all of our moves and requiring us to pay some tax especially with gains. I never knew before that this simple transaction can be somewhat a little bit complicated.   Good thing that here in my country the government is not yet that strict when it comes to taxes (but I am sure that time is coming when it will be requiring us to do the same).

If you dont like to experience headaches later then better to know first the laws of your country when it comes to taxation. Declaring anything as long you do gain and skipping out behavior isnt really a rightful thing to be done.

This thread is old and im sure OP's Ledger already arrived and also some points where keeping your coins on exchange wallets is always been risky.
No keys= Those coins arent yours fully.