How to account for exchange rates in a crypto payment
Value the crypto in US dollars at the payment time, note the rate provider and timestamp, and keep those records with the wallet transaction ID for taxes.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
On this page
- Paying with crypto is a taxable disposal.
- Value the crypto at the payment moment, not the purchase date.
- Keep the rate provider, its timestamp, and the wallet transaction ID together.
Paying with crypto gives you a US dollar value at the moment the payment left your wallet. That value sets your proceeds, and your cost basis sets what you subtract from it.
What you need before you start
The IRS classifies cryptocurrency as property, so your basis is usually what you paid in US dollars. A payment disposes of that property, so you value the units in dollars on the payment date, not the purchase date. Gather the asset type, the units, the exact payment time, and your purchase records. Pick a reputable rate provider and note its quote time.
How do you account for the exchange rate step by step?
Work in the order the payment happened, so the dollar value and the gain or loss line up.
- 1Collect the payment detailsNote the asset, the units, and the exact date and time the payment went out.
- 2Pick a rate and timePick one provider that quotes your asset in US dollars and note its quote time.
- 3Value the crypto in dollarsMultiply the units by the fair market value in US dollars at the payment time to get your proceeds.
- 4Work out the gain or lossSubtract your cost basis, usually what you paid, from the proceeds.
- 5Record everything togetherSave the payment amount, the rate, the provider and timestamp, and the wallet transaction ID.
What records and reports come after payment?
Keep one record for each payment that ties the wallet transaction to your tax numbers. Report the payment and any capital gain or loss on your federal return.
Frequently asked questions
Price it the same way, in US dollars at the payment time. If the stablecoin drifted from a dollar, record the value it actually had.
You may owe no capital gain tax if the value equals your basis, but the payment is still a disposal to report.
You can if it reflects the fair market value at payment time, but processors often build in a spread.
Value each one at its own time and rate, then add the amounts, and keep the cost basis for each asset separate.
