A taxable event in crypto is a disposal: you no longer own the asset you owned. Selling for dollars, swapping one token for another, spending crypto on something, and converting to a stablecoin are all disposals. Buying with dollars, holding, and moving between wallets you control are not.
These are disposals
| What you did | Why it is a disposal |
|---|---|
| Sold crypto for dollars | The obvious case. Proceeds minus basis is your gain or loss. |
| Swapped one token for another | You disposed of the first token at its market value that day. The dollars are notional and the event is real. |
| Converted to a stablecoin | A stablecoin is a different asset, so this is a swap. Being worth a dollar does not make it dollars. |
| Spent crypto on goods or services | You disposed of it at the value you spent, and separately bought whatever you bought. |
| Paid a fee in crypto | Technically a small disposal of the fee asset, which is why gas costs show up in reconciliations. |
| Bridged in a way that swaps the asset | If the token you hold afterward is a different asset, such as a wrapped version, treatment can differ. This one is genuinely unsettled and worth asking about. |
These are not
| What you did | Why it is not |
|---|---|
| Bought crypto with dollars | You acquired property. It sets your basis and starts your holding period. |
| Held through a rise or a fall | Unrealized gains are not taxed. Nothing happens until you dispose. |
| Moved between your own wallets | Same owner, same asset. Record it so it does not look like a sale later. |
| Sent crypto as a gift | Generally not a disposal for the giver below the annual exclusion, though the recipient inherits your basis. Gifts have their own rules. |
| Donated to a qualified charity | Generally not a disposal, and it may be deductible. This one has specific requirements worth checking. |
How long you held it matters
Gains on property held longer than a year are generally taxed at long term capital gains rates, which are lower than ordinary income rates. Held a year or less, the gain is short term and taxed as ordinary income. The clock runs from acquisition to disposal, per lot.
The edge cases people ask about
A swap that lost money still gets reported. It is a disposal with a negative result, and that loss is useful to you.
A failed transaction that still cost gas. The gas was spent, and there are reasonable positions on how to treat it. Keep the record either way.
Tokens you never asked for. An unsolicited airdrop into your wallet is a real question with an unsatisfying answer. See the income page.
A rug pull or a hack. Losing crypto to theft or to a worthless token has specific and restrictive rules that changed in 2018, and it is not as simple as writing off the loss.
Common questions
Is swapping ETH for SOL really taxable?
Yes, in the US. You disposed of ETH at its market value that day and acquired SOL. That no dollars were involved does not change it, and this is the single most common surprise for people in their first year.
What about converting to USDC to sit out a dip?
That is a swap into a different asset, so it is a disposal of what you sold. Moving into a stablecoin feels like moving to cash and is treated as a trade.
Do I owe tax on a coin that went up but I still hold?
No. Unrealized gains are not taxed. Nothing is owed until you dispose of it.
Where to go next
Confused about your own records?
We cannot prepare your return and we can help you understand what your transaction history actually says, so the conversation with your accountant is a short one.