Crypto & Digital Assets
Crypto creates a strange tax problem:
the transaction can be technologically new while the tax question is decades old.
Was property sold? Was income received? Who owns the asset? What is its basis? Did the taxpayer receive materially different property? Was there a recognizable loss?
Those questions still govern.
The difficulty is mapping them onto wallets, exchanges, smart contracts, staking protocols, bridges, token distributions, and assets that may not fit neatly into traditional categories.
Start with the transaction
A useful digital-asset tax sequence is:
transaction → character → basis → timing → reporting
Before asking which form to file, determine what happened.
A movement between your own wallets can be non-taxable. Using crypto to buy something can be a taxable disposition. Receiving staking rewards can create income before sale. Depositing assets into DeFi can require an analysis current guidance does not conclusively resolve.
The interface does not determine tax treatment.
The transaction does.
Guides
Crypto Cost Basis
Basis determines how much gain or loss exists when digital assets are disposed of. Covers wallet/account identification, specific identification, transition rules, Notice 2026-20, transaction costs, transferred assets, and missing-basis reconstruction.
Crypto Sales, Swaps, and Spending
Cashing out is not the only realization event. Covers cash sales, crypto swaps, purchases with crypto, stablecoins, transaction fees, holding periods, and §1091 wash-sale scope.
Crypto Transfers Between Wallets and Exchanges
Blockchain movement does not automatically mean realization. Covers self-transfers, basis and holding-period continuity, fees, transferred-in assets, broker basis gaps, and bridges.
Staking Rewards
Staking can create income before sale. Covers Rev. Rul. 2023-14, *Paschall*, dominion and control, custodial staking, locked rewards, basis, and liquid-staking uncertainty.
Airdrops, Hard Forks, and Token Distributions
Not every token distribution follows the same rule. Covers hard forks, delayed support, promotional distributions, governance tokens, claims, unsolicited tokens, and basis after income inclusion.
DeFi Tax
DeFi is where certainty falls fastest. Covers lending, borrowing, liquidations, liquidity pools, LP tokens, wrapping, bridges, liquid staking, and synthetic assets, with explicit uncertainty where direct authority is limited.
Crypto Losses
Economic loss is not automatically deductible tax loss. Covers realized losses, worthless tokens, abandonment, hacks, scams, theft, recovery rights, exchange failures, bankruptcy claims, and bad debts.
Crypto Gifts, Charitable Donations, and Inheritance
Covers gift carryover and dual basis, holding periods, charitable contributions, qualified appraisals, Form 8283 considerations, and inherited basis.
Form 1099-DA and Digital-Asset Reporting
Covers 2025 gross-proceeds reporting, 2026 basis reporting, covered/noncovered assets, transferred-in crypto, taxpayer/broker differences, Notice 2026-20, DeFi reporting relief, stablecoins, and NFTs.
Mining, Compensation, and Other Earned Digital Assets
Covers mining, employee compensation, contractor payments, self-employment considerations, promotional rewards, income-to-basis mechanics, and later investment gain or loss.
NFT Tax for Investors
Covers NFT basis, buying with appreciated crypto, sales and swaps, holding periods, Notice 2023-27, collectible treatment, fees, burns, redemptions, and tokenized physical assets.
Questions that repeat
The technology changes quickly. The durable questions repeat:
What did you own?
What did you receive?
Did ownership change?
What was your basis?
When did you obtain control?
Was there a sale, exchange, income event, gift, or loss?
What evidence proves the answer?
Outside this hub
Some issues belong elsewhere:
- foreign account and international information reporting;
- trader tax status and §475 elections;
- crypto retirement accounts;
- specialized crypto derivatives;
- detailed mining-business deductions.
Those topics should live in their governing tax domains rather than be duplicated here.
Tax forms and annual reporting
Digital-asset reporting rules continue to evolve, and annual tax forms can change from year to year. The guides in this section separate the underlying tax rules from year-specific filing mechanics.
When a transaction requires Form 8949, Schedule D, Form 4684, Form 8283, Form 1099-DA, Form 1040, or another annual form, use the final form and instructions for the tax year being filed.
Temporary IRS relief should also be read within its stated effective period rather than treated as a permanent rule.
PRISM principle
Digital assets do not need a separate theory of taxation for every new protocol.
They need disciplined classification.
Start with the transaction.
Identify the property.
Establish basis.
Determine timing and character.
Then solve reporting.
That sequence survives even when the technology changes.