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Crypto & Digital Assets

Digital assets are hard enough when you have only ever been taxed in one country. Buy before you arrive, hold on an exchange outside the U.S., and the questions stop having tidy answers. We will tell you what is settled, what is not, and what to do in the meantime.

What We Cover

From the coins you brought with you to the rewards that arrived last week.

Crypto acquired before you became a U.S. tax resident
Accounts and wallets held on non-U.S. exchanges
Cost basis, lot selection, and per-wallet accounting
Broker reporting on Form 1099-DA as it phases in
Staking rewards, airdrops, and mining income
Crypto received as payment for work or services
Reconciling exchange statements that disagree with each other

Which of these actually triggered tax?

Most people who owe more than they expected owe it on something they did not think of as a sale. Five common events, and what each one is:

1

You sold crypto for dollars

A disposal, and the obvious one. Gain or loss is proceeds minus your basis in the specific units you sold, and how long you held them decides the rate. The hard part is almost never knowing this — it is proving your basis.

2

You swapped one coin for another

Also a disposal, and by far the most commonly missed. Trading one digital asset for another is treated as selling the first at fair market value. No dollars moved and no cash arrived, but a gain may still be reportable — which is how people end up owing tax in a year they never cashed out.

3

You paid for something with crypto

A disposal too. Buying a laptop with appreciated crypto is, for tax purposes, selling the crypto and then buying a laptop. The gain is measured against the value at the moment you spent it.

4

You moved coins between your own wallets

Not a disposal. Nothing is realized by moving your own assets between your own wallets — but the transfer can wreck your records, because exchanges frequently report a transfer out with no basis attached and a transfer in with none either. Keeping the trail is the whole job.

5

You received staking rewards or an airdrop

Generally income when you gain control of it, valued at that moment — and that value becomes your basis for the eventual sale. Two taxable events, spaced apart, which is why reward income is so often reported once and then taxed again at disposal with a basis of zero.

Common Questions

I bought crypto years before I moved to the United States. Is the gain from before I arrived taxable here?

Usually yes, and this is the single most expensive surprise we see. Your basis generally carries over from what you originally paid — there is no general step-up to market value on the day you became a U.S. tax resident. Someone who bought early and abroad, then sells after moving here, can be taxed by the U.S. on appreciation that almost entirely happened before they arrived. Most people assume the opposite. Planning around the sale date, and around your residency start date, is worth doing before you sell rather than after.

Do I have to report crypto held on an exchange outside the U.S.?

That splits into two different reporting regimes, and they are not equally unsettled. FBAR reporting for foreign accounts was written for banks and brokerages, and how it applies to digital assets has been the subject of proposed changes rather than settled rules — that piece is genuinely unsettled, and anyone who gives you a confident one-word answer on it is overselling. Form 8938 is considerably less unclear, and the conservative practitioner position already leans toward reporting. What matters practically for both: an account holding regular currency alongside crypto is a different case from a crypto-only custodial account, and the two may not be treated the same. We look at what your specific account actually holds and take a documented position rather than guessing.

My exchange gave me a tax form and the numbers do not match my records. Now what?

That is normal and fixable. Broker reporting for digital assets is phasing in, and early forms often carry proceeds without reliable basis — particularly for assets you moved in from another platform or a self-custody wallet. The form is a starting point, not a verdict. We reconcile it against your own transaction history and report what actually happened, with the working papers to support it.

How should I be tracking cost basis across several wallets?

Per-wallet, and starting now if you are not already. The direction of travel in the rules is away from treating all your holdings as one pool and toward tracking each account separately, and reconstructing that after the fact is far harder than maintaining it. If your history is already tangled across exchanges and self-custody, that reconstruction is a large part of what we do.

Can I sell at a loss and buy back immediately?

The rule that blocks this for stocks has historically not applied in the same way to digital assets, because of how they are classified — but this has been repeatedly proposed for change, and we would not build a strategy on it lasting. If you are considering it, the answer depends on the rules in force for the year in question, so ask us before you trade rather than after.

Bring us the messy history

Old wallets, dead exchanges, coins you bought in another country before any of this mattered. We have reconstructed worse.

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