How is crypto taxed in the US?
As property. Every sale, swap, or spend is a disposal. Held 12 months or less, the gain is taxed as ordinary income (10–37%); held longer than 12 months, at 0%, 15%, or 20% depending on taxable income.
Work out your real crypto profit after exchange fees and capital gains tax, and see how much the 12-month long-term holding threshold is worth to you.
Cost basis = Buy price × Amount. Proceeds = Sell price × Amount. Fees = (Cost basis + Proceeds) × Fee%. Net profit = Proceeds − Cost basis − Fees − Tax on the gain.
Buying 0.5 BTC at $30,000 and selling at $65,000 with a 0.5% fee each side: cost basis $15,000, proceeds $32,500, fees $237.50, gross gain $17,262.50. Held 18 months at a 15% long-term rate, tax is $2,589 — net profit $14,673, a 97.8% return on basis.
As property. Every sale, swap, or spend is a disposal. Held 12 months or less, the gain is taxed as ordinary income (10–37%); held longer than 12 months, at 0%, 15%, or 20% depending on taxable income.
Yes. Trading ETH for SOL is a disposal of ETH at fair market value — a taxable event even though no fiat was received. This is the single most common under-reporting mistake.
Cost basis is what you paid, including fees. The US default is FIFO; Specific Identification lets you sell the highest-cost lots first to reduce the gain, but only if your records identify each lot at the time of sale.
Yes. Capital losses offset capital gains in full, plus up to $3,000 of ordinary income per year in the US, with the remainder carried forward indefinitely. The wash-sale rule has not historically applied to crypto, though this is under legislative review.
Trading fees are added to cost basis on purchase and subtracted from proceeds on sale, which reduces the taxable gain. Network gas fees on a taxable transfer are treated the same way.
Both are ordinary income at fair market value on the day you gain control, and that value becomes the cost basis for a later capital gain when you sell.