Every trade is taxable
Buying with USD isn't taxable. Selling for USD, trading one crypto for another, spending crypto, earning crypto, or receiving airdrops, all are taxable events at fair market value on that date. The swap rule surprises people most: trading bitcoin for ether is a sale of the bitcoin at that moment's price, gain or loss realized, even though no dollars ever appeared.
The 1099-DA changes the landscape
Starting with 2025 transactions, exchanges and brokers report gross proceeds to the IRS on Form 1099-DA, with basis reporting phasing in after. The practical meaning: unreported crypto sales now generate the same automated matching notices as unreported stock sales, and the proposed tax on those notices assumes zero basis. Reporting properly, with your own basis records, isn't just compliance; it's how you avoid being taxed on the full sale price.
Basis tracking is on you
IRS rules now require tracking basis wallet by wallet and account by account rather than pooling everything. Transfers between your own wallets aren't taxable, but they scramble the record unless documented. Exchange exports, a tracking tool, or at minimum a spreadsheet of buys, transfers, and sells is what makes the eventual Form 8949 accurate. Cleaning up years of history takes far longer than maintaining it as you go.
Staking and mining
Staking rewards are ordinary income at FMV on receipt. Mining is self-employment income if done as a trade or business, otherwise ordinary income. Either way the amount recognized becomes your basis in the coins, so the income event and the later capital gain or loss stack rather than double-count. Rewards accruing in small amounts across the year make FMV documentation tedious, which is another argument for tooling.
No wash-sale rule (yet)
Stock wash-sale rules don't currently apply to crypto, which enables tax-loss harvesting strategies. Legislation may close this. Selling a losing position, banking the capital loss, and repurchasing immediately remains mechanically available in a way it isn't for securities. Losses from exchange collapses and frozen platforms are messier territory, fact-specific and worth professional eyes before claiming.
Common questions
- Do I have to report if I didn't sell?
- Only if you had a taxable event (trade, spend, earn). Pure hold = no report. Answer the crypto question on 1040 honestly anyway.
- Are crypto-to-crypto swaps really taxable?
- Yes. Each swap disposes of the asset you gave up at its fair market value that day. No dollars needed; the gain or loss is real either way.
- What about NFTs?
- Same framework: buying with crypto disposes of the crypto, selling the NFT is a taxable sale, and some NFTs may be taxed as collectibles at the higher collectibles rate. Creator royalties are ordinary income.
- I lost coins on a bankrupt exchange. Can I deduct that?
- Sometimes, and the timing depends on when the loss becomes fixed and determinable, often the bankruptcy resolution rather than the freeze. It's fact-specific enough that guessing on the return isn't worth it.
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Personal Income Tax Preparation
Federal and state 1040 preparation with year-round planning. We handle W-2, 1099, K-1, rental, and crypto income for individuals in Florida and all 50 states.
Tax Planning
Year-round tax planning for individuals and business owners. We project the year's income quarterly and model decisions before they become tax liabilities.
Capital Gains Tax Rates
Long-term gains are taxed at 0%, 15%, or 20% by income; short-term gains use your ordinary rate. 2025 brackets, the 28% collectibles cap, and the 3.8% NIIT.
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