I Asked a CPA About Crypto Gains — Here’s What Counts as a Tax Event

Core Insights - The IRS is aware of crypto profits and the focus is on identifying which transactions trigger tax obligations [1] Taxable Events - Selling or exchanging cryptocurrency is a taxable event, not just cashing out to dollars. Any buy, sell, or exchange in a non-retirement account results in capital gains or losses [3] - The duration of holding the cryptocurrency affects tax rates. Profits from assets held for one year or less are taxed at ordinary income rates, while those held for over a year may qualify for lower long-term capital gains tax rates [4] - Mining cryptocurrency and receiving rewards is considered ordinary income for tax purposes, typically reported via form 1099-NEC [5] - Crypto airdrops and forks can also trigger tax events, as they are considered ordinary income and must be reported to the IRS regardless of receiving a 1099 form [6] Non-Taxable Events - Buying and holding cryptocurrency does not create a taxable event, and no tax consequences arise until the asset is sold or exchanged [6][7] - Transactions made in tax-deferred or tax-free accounts, such as traditional or Roth IRAs, are not taxed like those in brokerage accounts [7]