IRS Notice 2014-21, Rev. Rul. 2023-14
Cryptocurrency Tax Planning
Cryptocurrency requires careful tax planning. Tax-loss harvesting can offset gains, specific identification of lots optimizes cost basis, and proper reporting avoids IRS penalties. Staking and DeFi have unique tax implications.
Who this may apply to
- Trade or hold cryptocurrency
- Have unrealized gains or losses
- Participate in staking, lending, or DeFi
- Need help with cost basis tracking
Strategy connections
Works well with
- Tax-Loss Harvesting: Loss planning must account for whether a digital asset is itself treated as stock or a security under Section 1091.
What could block this
- No digital-asset activity
- Transaction history and basis cannot be reconstructed
- The proposed replacement asset creates a wash-sale or economic-risk concern
Important considerations
- The IRS treats every crypto-to-crypto trade as a taxable event, not just crypto-to-USD — most traders significantly underreport
- Form 1099-DA reporting began with gross proceeds for certain 2025 broker transactions; basis reporting for covered digital assets generally begins for transactions after 2025
- Do not apply a blanket “no wash sale” rule to digital assets. Confirm whether the asset is treated as stock or a security and monitor legislative and regulatory changes before repurchasing.
- DeFi activity is complex — LP positions, impermanent loss, and protocol rewards all have different tax treatments. Use a specialist
Professional support
Crypto Tax Specialist
Will reconcile wallet transactions, calculate cost basis, implement tax-loss harvesting, and prepare compliant returns.
Timing
Track transactions in real-time — reconstructing cost basis retroactively across wallets and exchanges is very difficult. Run a preliminary report in November to identify year-end tax-loss harvesting opportunities.
Official sources
Reviewed 2026-07-24