Are you confused about what is and isn’t taxable in the world of crypto? If so, you’re not alone! Most people have questions on the topic and rightly so, as the IRS has had very little to say since issuing its original guidance in 2014, which does not provide crystal-clear answers.
In Notice 2014-21, the IRS stated that crypto is taxed as property, which means it is subject to long-term and short-term capital gains and losses. And despite the fact that the IRS has not issued additional guidance or clarification, it nevertheless has been very active in enforcement.
So let’s clear up what is taxable vs. what isn’t taxable.
What is taxable?
- Selling crypto for fiat currency (USD, EUR, etc.)
- Selling one crypto for another crypto
- Paying for goods or services with crypto
So what isn’t taxable?
- HODLing your crypto
- Buying crypto with fiat currency
- Transferring crypto from your personal wallet to an exchange, and vice versa
- Donating crypto to charity
- Gifting crypto to friends or family (under $15k per person per year)
At ProfitStance, we’ve spent a lot of time and energy to ensure we understand the tax laws so you don’t have to. Our mission is simple: to help you accurately and easily calculate and report your crypto gains and losses. Visit us at www.profitstance.com and let us take the pain out of this messy process.