Cryptocurrency, digital tokens, and non-fungible tokens (NFTs) are treated as property by the Internal Revenue Service under Notice 2014-21. Consequently, every single sale, exchange of one cryptocurrency for another, or spending of crypto on goods and services triggers a taxable capital gain or loss event that must be reported accurately on IRS Form 8949 and Schedule D.
1. DeFi Swaps, Liquidity Pools & Staking Rewards
Decentralized finance (DeFi) protocols introduce complex accounting challenges. Depositing tokens into automated market maker (AMM) liquidity pools or receiving staking rewards creates taxable income events at the exact fair market value (in USD) when the tokens are received or staked. Without specialized sub-ledger tracking across Ethereum, Solana, and Layer 2 blockchains, standard broker 1099s frequently overreport taxable capital gains by failing to track cost basis across wallets.
2. Year-End Tax-Loss Harvesting Opportunities
Because cryptocurrencies are currently not subject to the statutory wash-sale rules under IRC Section 1091 (which apply strictly to stocks and securities), digital asset investors have a unique opportunity to harvest capital losses during market dips and immediately repurchase their positions�locking in tax deductions against stock market capital gains plus up to $3,000 of ordinary income each year.
Reconcile your digital asset sub-ledgers
Our CPAs reconcile complex multi-wallet DeFi, staking, and exchange transactions into clean Form 8949 filings.
