How are crypto to crypto swaps taxed in the US?
A crypto to crypto swap is a taxable disposal in the US. You owe capital gains tax on the difference between the value received and your cost basis.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
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- Proceeds are the fair market value of the coin you receive.
- Your new coin starts with a cost basis at that swap value.
- Holding period decides short term or long term treatment.
- Report swaps even when the result is a loss.
A crypto to crypto swap is a taxable disposal in the US. You will gather the records for each swap, calculate the gain or loss, and report it on your return. You need the dates, values, and basis for every trade.
Are crypto to crypto swaps taxable?
The IRS treats cryptocurrency as property, not currency. Exchanging one digital asset for another counts as a disposal, so you must figure a capital gain or loss.
What do you need before you start?
For each swap, you need the fair market value of the coin you received. The coin you receive also gets a new cost basis at that fair market value.
How do you calculate and report?
Work through the swap as a disposal. Set proceeds first, subtract basis, check the holding period, then report the result.
- 1Gather swap recordsRecord the type of digital asset, date and time, units, and fair market value in US dollars.
- 2Set your proceedsUse the fair market value of the coin you received.
- 3Find adjusted basisYour basis in the coin you gave up is generally its cost in US dollars, including fees to acquire it.
- 4Subtract basis from proceedsThe difference is your capital gain or loss on the swap.
- 5Check holding periodOne year or less is short term; more than one year is long term.
- 6Report the swapReport each swap on your federal return regardless of gain or loss, and answer the digital assets question Yes.
What should you do afterward?
Keep the records for each swap after you file. The Internal Revenue Code requires records that support the positions you take on your return.
- Save exchange and wallet histories for each swap.
- Keep the value and basis records for the new coin.
- Store records for swaps on decentralized exchanges.
- Keep transfer fee records if you paid a fee with digital assets.
Frequently asked questions
You report the capital loss on your return. It can offset capital gains, and a limited amount may offset ordinary income if it exceeds your gains.
No. Moving digital assets between wallets you own or control is not a disposal. The exception is paying a transfer fee with digital assets.
If you received it as payment for services, you recognize ordinary income at its fair market value when received. That value becomes your cost basis, so the later swap can produce a capital gain or loss.
