I Sold Cryptocurrency — What the IRS Wants to Know
Capital gains, cost basis, 1099-DA, and how to report crypto on your taxes.
Selling crypto is a taxable event
When you sell, trade, or spend cryptocurrency, the IRS treats it as selling property — not currency. You owe capital gains tax on the difference between what you paid (cost basis) and what you sold it for. Held it over a year? Long-term capital gains rates (0%, 15%, or 20%). Under a year? Taxed as ordinary income at your regular rate.
Source: IRS Notice 2014-21 and Publication 544
The new 1099-DA form (2026)
Starting with 2025 transactions, crypto exchanges like Coinbase and Kraken now send Form 1099-DA reporting your gross proceeds. Important: these forms may not include your cost basis, especially for assets transferred from other wallets. You're responsible for tracking your own cost basis. DeFi activity, NFT sales, and wallet-to-wallet transfers are generally NOT captured on the 1099-DA.
Source: IRS regulations under IRC Section 6045
Just holding isn't taxable
If you bought Bitcoin and haven't sold it, you don't owe anything. Buying and holding is not a taxable event. You only trigger tax when you sell, trade one crypto for another, spend crypto to buy goods/services, or receive crypto as payment for work.
Source: IRS FAQs on Virtual Currency
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Ask a Tax Question →This is tax education, not tax advice. Always consult a qualified tax professional for your specific situation. Information sourced from publicly available IRS publications.