Whether you’re an investor expanding your portfolio to include digital assets such as cryptocurrencies and tokens, a business that uses cryptocurrencies to engage in everyday transactions, or a crypto “miner,” you need to keep in mind the tax implications of your activities. The purpose of this article is to provide you with a brief primer about the U.S. federal income tax implications of transactions involving cryptocurrency and similar digital assets.
1. Buying and Selling Crypto for Cash
Let’s start with the basics. Whether on your own or indirectly through a broker, let’s assume you’ve done some preliminary research, opened up a digital wallet, funded your account with cash, and you’re ready to purchase one of the many types of digital assets available to you.