The IRS’s FAQ sums up the rules for receiving crypto as a gift:
“If you receive virtual currency as a bona fide gift, you will not recognize income until you sell, exchange, or otherwise dispose of that virtual currency. See Publication 559. Your basis in virtual currency received as a bona fide gift differs depending on whether you will have a gain or a loss when you sell or dispose of it. For purposes of determining whether you have a gain, your basis is equal to the donor’s basis, plus any gift tax the donor paid on the gift. For purposes of determining whether you have a loss, your basis is equal to the lesser of the donor’s basis or the fair market value of the virtual currency at the time you received the gift. If you do not have any documentation to substantiate the donor’s basis, then your basis is zero. Your holding period in virtual currency 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.”

IRS Publication 559 is designed to help those in charge (personal representatives) of the property (estate) of an individual who has died (decedent). It shows them how to complete and file federal income tax returns and explains their responsibility to pay any taxes due on behalf of the decedent.

When a U.S. person receives gifts from foreigners, the gifts are not taxable; however, taxpayers may be subject to reporting requirements that come with hefty penalties if certain forms are not filed in a timely manner. When a U.S. person receives gifts from a foreign person, estate, or related-parties, the taxpayer may be required to aggregate such gifts, and if they exceed $100,000 alone or in aggregate, they must file IRS Form 3520 and may be required to file FinCEN Form 114 (FBAR) or Form 8938 (much more on these later).