🟣 Transactions & Events — Frequently Asked Questions
❓ Is trading crypto-to-crypto taxable?
✅ Yes. The IRS considers trading one crypto for another (e.g., BTC → ETH) a taxable event. You must calculate the fair market value in USD at the time of the trade and report any capital gain or loss.
❓ Do I pay taxes if I convert crypto to stablecoins?
Yes. Converting crypto into a stablecoin (like USDT, USDC, DAI) is treated like a sale. The IRS expects you to calculate the gain or loss between your purchase price and the value at the time of conversion.
❓ Is spending crypto on goods or services a taxable event?
Yes. When you use crypto to buy something — whether it’s coffee, a car, or a laptop — it’s treated as if you sold the crypto for its market value. You may owe capital gains tax if the crypto increased in value since you acquired it.
❓ How is receiving crypto as payment treated?
If you receive crypto as payment for goods or services (e.g., freelance work or business income), it’s treated as ordinary income. The taxable amount is based on the fair market value of the crypto on the day you receive it.
❓ Are airdrops, staking, or mining considered transactions?
Yes. These activities are considered income events when the tokens are received. Later, when you sell or swap those tokens, that becomes a separate capital gains or loss event.
❓ What happens with NFTs — are they taxed like crypto?
Yes. Buying, selling, or trading NFTs is treated similarly to crypto transactions.
• Selling NFTs → Capital gains or losses apply.
• Creating & selling NFTs as an artist → Usually ordinary income.
• Buying NFTs with crypto → Taxable disposal of the crypto used.
❓ How are DeFi and yield farming activities taxed?
DeFi transactions often trigger multiple taxable events, such as:
• Swaps or liquidity provision: Usually treated as taxable trades.
• Yield or interest rewards: Often taxed as income when received.
• Withdrawing funds: May trigger capital gains depending on price changes.
Record-keeping is essential because these can get complex quickly.
❓ Do transfers between my own wallets trigger taxes?
🚫 No. Simply moving crypto between your own wallets or exchanges is not taxable as long as you still control the assets. However, it’s smart to keep records to prove they were personal transfers if the IRS asks.
🔗 Some Useful Official IRS Links You Can Use
- IRS Crypto FAQ —
https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions - IRS Digital Assets Info —
https://www.irs.gov/businesses/digital-assets - Form 8949 (Capital Gains & Losses) —
https://www.irs.gov/forms-pubs/about-form-8949 - Schedule D Instructions —
https://www.irs.gov/forms-pubs/about-schedule-d-form-1040