Tax implications of receiving Bitcoin as a gift from abroad

I do not mean any sarcasm here. When asked the best way to gift appreciated assets to a loved one, whether it be the Apple shares bought decades ago, or the Bitcoin bought a few years back, the answer is to die and leave it to the beneficiary. The asset gets a stepped up basis.

It's off-topic to debate the merits or fairness of tax code, the rules we use when answering here. In your case, the basis follows the gift. If there are no records, and you are audited, the IRS might just assume those coins were mined or bought for pennies. At the same time, the low basis implies a 'long term' gain on the asset held over a year. I believe (read that, 'I think, but not 100% sure') that applies to B**coin as well.

I was amazed to learn that indeed, if you get a (NON-money) property gift from another US person, indeed you "GET" the capital gains tax!

"when you give away your property, the tax basis (or the original cost) of the property for the giver becomes the tax basis for the recipient"

https://www.elderlawanswers.com/giving-your-home-to-your-children-can-have-tax-consequences-9667

HOWEVER:

It would seem that in general, a gift from someone overseas is wholly non-taxable to you in the US

https://www.lexology.com/library/detail.aspx?g=8fbfe9c0-39a4-4845-a39e-4ec4b23115b9

ASIDE: note that YOU MUST REPORT IT or you will be fined 25% of the amount.

HOWEVER:

If it is a "US - Situs" item, they will f' you. Here's a gem:

https://klasing-associates.com/u-s-tax-implications-receiving-gifts-foreign-citizens/

"Danger: It is not recommended that an offshore relative wire funds directly into your U.S. accounts. There is a risk the IRS or state tax authority could argue that for the millisecond that the transfer bounced around in U.S. Cyberspace the government had in rem jurisdiction and assert a transfer tax."

Based on that opinion-piece for a tax practice, it's entirely possible that the US will/has declared that bitcoin is US Situs (since almost all bc processing is on US hardware - anyway, they could just declare it); if so you're screwed, it would be like your foreign relative giving you a house which is in the US which she owns.

CASH?

Would it be worth it for Russian Aunty to simply change it to dollars, and then gift you the dollars? You can then buy bc if you like, or whatever. If it's a dollar gift you are home free.