Crypto Tax Obligations

In most countries, crypto is treated as property. Buying isn't taxable. But selling, trading one crypto for another (even BTC to ETH), or spending crypto creates 'disposal events' triggering capital gains tax. Long-term holdings (over one year in the US) are typically taxed at lower rates than short-term trades.

Income events are separate: mining rewards, staking rewards, airdrops, and earning crypto for work are taxed as ordinary income at fair market value when received. If you receive 1 ETH as staking reward when ETH is $3,000, you owe income tax on $3,000, even if you don't sell. Later selling for $4,000 would trigger capital gains on the $1,000 appreciation.

DeFi creates additional complexity. Every DEX swap is potentially taxable. Providing liquidity may trigger obligations. Wrapping tokens may or may not be taxable depending on jurisdiction. Tax treatment varies by country and is still being clarified in many places.

Use crypto tax software: Koinly, CoinTracker, TokenTax, or CoinLedger import exchange data, calculate cost basis using methods like FIFO (First In, First Out), and generate reports. Start tracking from day one. If your situation is complex, a crypto-specialized tax professional is worth the investment.