Splitting crypto 50/50 by face value does not split it evenly, because two assets with the same face value can be worth different amounts after tax. Crypto with a low cost basis carries a built-in tax bill that cash doesn’t, so a settlement that splits by face value alone may not be an even split. The good news is that this is easy to measure before you sign anything. Below I use IRS sources for the rules and assumed numbers for the example, then list ways to close the gap.
The Rule: No Gain at Transfer, Basis Carries Over
IRS Publication 504 says that generally no gain or loss is recognized on a transfer to a spouse or former spouse if the transfer is incident to divorce. Property received from a spouse or former spouse is treated as acquired by gift for income tax purposes, and its value is not taxable to the person who receives it. The receiving spouse’s basis is the same as the other spouse’s adjusted basis, even if that basis is less than the property’s value at transfer, and the other spouse must give records showing the adjusted basis and holding period (IRS Publication 504). In other words, the receiving spouse takes over the original cost basis, including any built-in gain.
What Counts as Incident to Divorce
The same publication says a transfer qualifies if it occurs within 1 year after the date the marriage ends, or if it is related to the end of the marriage. A transfer is related to the end of the marriage if it is made under the divorce instrument and occurs within 6 years after the marriage ends. Otherwise it is presumed not to be related, though that presumption can be overcome. The exceptions include a spouse who is a nonresident alien (IRS Publication 504).
A Worked Example (Assumed Numbers)
These figures are assumed for illustration. Say a couple bought 3 Bitcoin at $33,000 each, a basis of $99,000, and the 3 Bitcoin are now worth $300,000. The embedded gain is $201,000. The IRS says an asset held more than one year produces a long-term gain, and for 2025 the long-term rates are 0%, 15% and 20% depending on taxable income (IRS Topic 409). It also describes a 3.8% net investment income tax that applies when modified adjusted gross income exceeds $250,000 for married filing jointly, $200,000 for single or head of household, or $125,000 for married filing separately (IRS Topic 559). Your actual rate depends on your own situation, so here are three assumed scenarios for a later sale.
| Assumed rate | Tax if sold | After tax | Bitcoin share of combined after-tax value (vs. $300,000 cash) |
|---|---|---|---|
| 15% | $30,150 | $269,850 | 47.4% |
| 15% + 3.8% | $37,788 | $262,212 | 46.6% |
| 20% + 3.8% | $47,838 | $252,162 | 45.7% |
At the highest assumed rate of 23.8%, the Bitcoin is worth about $252,162 after tax against $300,000 in cash, so the Bitcoin spouse ends up with about 45.7% of the combined after-tax value instead of 50%. That is simple arithmetic on the assumed numbers, not a general finding.
What Can Close the Gap (My Suggestions)
- Find the cost basis for each holding before negotiating. Without it, nobody can estimate the embedded tax. The ABA committee article recommends reconstructing acquisition history by wallet, account and lot, using bank funding records, purchase confirmations and tax-software exports (ABA Family Law Committee).
- Compare assets on an after-tax basis, as the table above does, instead of by face value. The same ABA article says receiving low-basis crypto versus cash can produce very different after-tax results and recommends evaluating basis, holding period and built-in gain before an in-kind division.
- Consider an equalizing adjustment. At the 23.8% scenario, combined after-tax value is $552,162, so an even split is $552,162 ÷ 2 = $276,081 each. The Bitcoin spouse would need about $23,919 more to reach that. This is only illustrative arithmetic.
- Consider dividing the coins themselves rather than coins for cash. Each spouse then holds the same asset with the same basis.
- Treat selling as a separate decision. The rule above covers the transfer, not a later sale to a third party.
- Work with a tax professional and your attorney to run the numbers for your case.
Splitting Crypto 50/50 in a Divorce: Questions Answered
Does this only affect crypto? The carryover-basis rule in Publication 504 is stated for property in general, so appreciated stock would work the same way.
Does the receiving spouse get a stepped-up basis? Not under the rule above. Publication 504 says the receiving spouse takes the transferor’s adjusted basis.
Is the 23.8% rate always right? No. It combines the top long-term rate and the net investment income tax. Lower income can mean a lower rate, as the table above shows, and the thresholds are in the IRS topics cited.
My Take on Splitting Crypto 50/50 in a Divorce
- In my view, the single most useful number to get before negotiating is the cost basis, because every after-tax comparison depends on it.
- In my suggestion, ask both sides to agree on an assumed tax rate for the comparison so that the discussion stays about arithmetic rather than guesses.
Sources
- IRS Publication 504: Divorced or Separated Individuals
- IRS Topic 409: Capital gains and losses
- IRS Topic 559: Net investment income tax
- ABA Family Law: Following the coins, digital asset tracing and division in divorce
Related reading: Your Divorce Judgment Says Split the Crypto. Here’s Why That Might Not Happen. and The $15,000 Question Nobody Asks in a Crypto Divorce: Which Lot Are You Actually Transferring?.
This article offers general information and my own opinions, not financial, tax, or legal advice. The figures in worked examples are assumed. Laws, tax rules, and products change and can differ by location, so check current official sources and talk to a qualified professional about your own situation.