Crypto & Digital Asset Tax Services

Yes. The IRS treats cryptocurrency and other digital assets as property, and every taxable disposition must be reported. Taxable events include selling crypto for cash, trading one crypto for another, using crypto to buy goods or services, receiving crypto as payment for work or services, mining or staking rewards, airdrops, and certain DeFi activities. Simply holding crypto is not taxable, and transferring between your own wallets is not taxable. Every Form 1040 now includes a digital asset question at the top that you must answer honestly under penalty of perjury.

Crypto is taxed as property, so gains and losses follow capital gains rules. If you hold a position for more than one year before selling, gains qualify for long-term capital gains rates (0%, 15%, or 20% depending on income). Positions held for one year or less are taxed at ordinary income rates. Losses can offset other capital gains and up to $3,000 of ordinary income per year, with the balance carried forward. Unlike securities, crypto is not subject to the wash-sale rule as of current guidance — meaning tax-loss harvesting strategies that are off-limits for stocks are still available for digital assets, though Congress has proposed changing this.

Staking rewards and airdrops are generally treated as ordinary income at their fair market value on the date you gain dominion and control, creating a new cost basis equal to that value. DeFi transactions — liquidity provision, yield farming, wrapped tokens, lending protocols, and bridge transactions — are among the most complex areas of crypto tax because each protocol interaction may create a separate taxable event. We work with clients using tools like CoinTracker, Koinly, and TokenTax to reconcile on-chain activity and produce defensible cost-basis reports.

The IRS has significantly increased enforcement around unreported crypto, including John Doe summonses to major exchanges, the 1099-DA reporting regime starting with the 2025 tax year, and Operation Hidden Treasure. If you have unreported crypto from prior years, you generally have two options: file amended returns to come into voluntary compliance, or consider the IRS Voluntary Disclosure Program if the conduct was willful and substantial. We help clients quantify the exposure, prepare amended returns, and in some cases negotiate penalty abatement under first-time-abatement or reasonable-cause standards.

Beginning with the 2025 tax year, centralized crypto exchanges are required to issue Form 1099-DA reporting gross proceeds from digital asset transactions to both the taxpayer and the IRS. Cost basis reporting begins in 2026. This means the IRS will now receive matching information on your crypto activity, similar to how 1099-B works for stock sales. If your reported gains don't match what the exchange reports to the IRS, you'll receive a CP2000 notice. Good recordkeeping and a reliable crypto tax software stack are now essential.

Yes. NFT minting, sales, and royalty income have unique tax characterizations depending on whether you're a creator, investor, or trader. Creator royalties are generally ordinary income (and may be subject to self-employment tax), while secondary NFT purchases held as investments are capital assets. DeFi developers receiving token grants, protocol incentives, or governance tokens face additional complexity around the timing of income recognition. We help clients in both categories structure their activity for optimal tax treatment.