Staking, mining and airdrops
- Staking rewards are ordinary income at fair market value when you gain control of them (Revenue Ruling 2023-14).
- Mining rewards are ordinary income when received, and self-employment income if you mine as a business.
- Airdrops and hard-fork coins are ordinary income when received and under your control (Revenue Ruling 2019-24).
- The value you report as income becomes your cost basis, which reduces the gain when you later sell.
DeFi transactions
- Swaps of one token for another are taxable dispositions, just like trades on an exchange.
- Liquidity pools, wrapping and lending: the IRS hasn't issued specific guidance on many of these, and some can be treated as taxable exchanges. We take consistent, documented positions you can defend.
- Interest and yield from lending protocols is generally ordinary income.
- DeFi and self-custody activity generally isn't reported on Form 1099-DA, but it's still taxable and still yours to report.
NFTs
Buying an NFT with crypto is a disposition of that crypto. Selling an NFT produces a capital gain or loss, and under IRS Notice 2023-27, NFTs whose underlying asset is a collectible (such as artwork) may be taxed at the collectibles rate of up to 28% on long-term gains. Creators who sell NFTs generally have ordinary income.
Records that make this work
Wallet addresses, transaction histories, and the fair market value of rewards when received. We reconcile on-chain data with your exchange records so your return is complete and consistent.
Frequently asked questions
Are staking rewards taxable before I sell them?
Yes. They're ordinary income at fair market value when you gain control of them, under Revenue Ruling 2023-14.
Is providing liquidity to a DeFi pool taxable?
It can be. Depositing tokens in exchange for LP tokens may be treated as a taxable exchange, and the IRS hasn't issued specific guidance. We document a consistent, defensible position.
How are NFTs taxed?
As property. Sales produce capital gains or losses, and NFTs tied to collectibles such as art may be taxed at up to 28% on long-term gains under IRS Notice 2023-27.
Will DeFi activity appear on Form 1099-DA?
Generally not. Form 1099-DA covers custodial brokers, so self-custody and DeFi activity must be reported from your own records.