Cryptointermediate

Crypto tax basics

Disposals, cost basis, and the records you should keep.

TL;DR

Most jurisdictions treat crypto as property — every sale, swap, or spend is a taxable event with potential capital gains. Records matter more than strategy. This is not tax advice — talk to a professional.

Taxable events

These trigger a gain/loss calculation in most jurisdictions.

→Selling crypto for fiat
→Swapping one crypto for another (BTC → ETH IS a taxable event)
→Spending crypto on goods/services
→Earning crypto (staking, mining, airdrops) — usually income at receipt
→Receiving NFTs above gift thresholds (varies)

Non-taxable events

Movement, not realisation.

→Buying crypto with fiat
→Holding
→Transferring between your own wallets
→Gifts up to annual exclusion

Cost basis and methods

Cost basis = what you paid (in fiat) for the crypto. Gain = sale price − cost basis. Most countries default to FIFO but allow LIFO or specific identification. Pick a method, document it, stick with it.

Worked example

Simple gain calculation

Bought 1 BTC at $30,000 in 2023. In 2025 swap 0.5 BTC for ETH when BTC is $65,000.

1Cost basis (0.5 BTC)$15,000
2Proceeds at swap$32,500
3Gain$17,500
4Holding period>12 months → long-term rate
5US tax (15% LTCG)$2,625
6ETH cost basis going forward$32,500

Takeaway

Every swap creates a taxable event AND establishes new cost basis. Tracking matters — without records, you'll guess and overpay.

Common mistakes

What to avoid

!Treating crypto-to-crypto swaps as non-taxable — they are taxable almost everywhere
!Not tracking cost basis — IRS assumes zero and taxes the full sale
!Forgetting staking/airdrop income — taxed at receipt at income rates
!Ignoring DeFi taxable events — LP, lending, swaps inside protocols all create gain events
!Procrastinating — tools like Koinly save 100× the time when used throughout the year

Self-check

Test yourself

Q1Is swapping BTC for ETH a taxable event?+

Yes — in most jurisdictions, crypto-to-crypto swaps are treated as a sale + purchase.

Q2What is 'cost basis'?+

What you originally paid (in fiat-equivalent) — subtracted from sale price to compute the gain.

Keep reading