A quick way to see how the IRS treats a common crypto transaction: whether it is taxable, what kind of income it is, which form the IRS points to, and how to answer the digital asset question on Form 1040.
Transaction receipt
- Form
- Form 1040 digital asset question
- Basis
Crypto Taxes in the US →Reporting Crypto Trades on Your Tax Return →Crypto Exchange Fees Explained →Hot vs Cold Crypto Wallets, and Who Holds Your Keys →
Educational only, not tax advice. Tax rules for digital assets are changing; check the IRS instructions for the year you file and talk to a tax professional about your own situation. Nothing you pick leaves your browser.
Where the answers come from
The check follows the IRS’s digital assets page and its Frequently Asked Questions on Virtual Currency Transactions. The IRS treats digital assets as property: selling them, exchanging them for another digital asset or spending them on goods or services is a disposition with a capital gain or loss, while crypto received as pay, staking rewards or an airdrop after a hard fork is ordinary income at its fair market value when received.
The digital asset question on Form 1040 asks whether, at any time during the year, you received a digital asset as a reward, award or payment, or sold, exchanged or otherwise disposed of one. The IRS lists buying with dollars and moving crypto between your own wallets under No, unless you paid a transaction fee with digital assets. For less common cases, such as gifts and donations, it offers an online questionnaire.
The holding period line uses the IRS rule that more than one year is long-term, and the 2026 0% long-term thresholds from Rev. Proc. 2025-32. The check does not compute your tax, cannot see your basis or other income, and does not cover mining, lending, NFTs or business inventory. More in Crypto Taxes in the US: What Is Taxable and How Much and Reporting Crypto Trades on Your Tax Return: Forms 1099-DA, 8949 and Schedule D.