Guide: Is Holding Crypto Taxable?

Question 1

Do I need to pay taxes on cryptocurrency if I'm only buying and holding?

Accepted Answer

No, buying and holding cryptocurrency is not a taxable event. Taxes are triggered when you sell, exchange, or otherwise dispose of your cryptocurrency.

Question 2

How are cryptocurrency trades and swaps taxed?

Accepted Answer

Trading or swapping one cryptocurrency for another is considered a taxable event, with any capital gains or losses needing to be reported to the IRS.

Question 3

What crypto transactions are not taxable?

Accepted Answer

Transferring cryptocurrency between your own wallets or accounts and receiving a cryptocurrency as a gift are two common not taxable events. Purchasing cryptocurrency with fiat currency (like USD, EUR, etc.) is not considered a taxable event. Taxes are only triggered when you dispose of the cryptocurrency, such as selling it for fiat, trading it for another crypto, or using it to purchase goods or services. Another scenario that's generally not taxable involves swapping one type of cryptocurrency for an identical one within the same blockchain, often referred to as a "wallet-to-wallet transfer." This is not to be confused with trading one cryptocurrency for another different cryptocurrency, which is taxable.

Crypto Accounting 101: Keeping Finances Separate

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