USA Specific Crypto Tax Classifications

USA specific crypto tax classifications for 2021, in general, are not easy to understand and there are different regulations and exceptions. The worst part is that you have to do it every year and have forgotten everything since the last time you filed.

When it comes to crypto taxes, you, the individual citizen, aren’t the only ones struggling with the regulations. Governments and even experienced CPAs are in the same boat. The reason is this space is growing so fast, includes all traditional investment vehicles supported in a decentralized manner, and entirely new paradigms (like NFTs). As a consequence, the government can’t keep up and probably has never heard about decentralized liquidity pools or some other new cool features that are being developed in the crypto ecosystem.

We partnered up with local tax experts so that we can provide all the knowledge you need to be able to file your tax report by yourself. You should read this article if you:

  • are interested in crypto taxation for the USA
  • need to report your crypto taxes in the USA
  • want to learn more about the specific classifications for the USA

Now let’s deep dive into all the classifications you can find in ACCOINTING.com and understand the consequences of the different income and disposal taxations.

Incoming Transactions / Deposits: Classifications and their consequences

The following USA specific crypto tax classifications for 2021 describe how deposits get treated in the ACCOINTING.com Tax Report in terms of taxable or not taxable and how their cost basis gets calculated. You will find the statement for the incoming transactions in the FullTaxReport.pdf and in the Fulldataset export; they are either summed up in the taxable income table or the non-taxable income table depending on their crypto tax classifications for the USA.

The cost basis is defined by the classification as well, if you acquired the asset in a trade (e.g. swap, buy, otc,…) ACCOINTING.com defines the cost basis with the value of the sell side of this trade. If you received the asset as solely from the deposit, for example an Airdrop, ACCOINTING.com will define the cost basis based on the price the asset has at the receiving date.

Classification type (incoming transaction)Taxable or not taxable?Definition of Cost basis
No classificationTaxable incomeCost basis: Value of the receiving date.
Buy trade (incoming)Not taxableCost basis: Proceeds of the sell side
OTC trade (incoming)Not taxableCost basis: Proceeds of the sell side
ICO trade (incoming)Not taxableCost basis: Proceeds of the sell side
HardforkTaxable incomeCost basis: Value of the receiving date.
AirdropTaxable incomeCost basis: Value of the receiving date.
MiningTaxable incomeCost basis: Value of the receiving date.
BountyTaxable incomeCost basis: Value of the receiving date.
Masternode incomeTaxable incomeCost basis: Value of the receiving date.
Staking Income**Taxable incomeCost basis: Value of the receiving date.
Received gift*Not taxableCost basis: Value of the receiving date.
Swap (DEX)Not taxableCost basis: Value of the receiving date.
Income from gamblingTaxable incomeCost basis: Value of the receiving date.
Add fundsNot taxableCost basis: Value of the receiving date.
Income (for a work)Taxable incomeCost basis: Value of the receiving date.
Liquidity pool incomeTaxable incomeCost basis: Value of the receiving date.
ReconcileTaxable incomeCost basis: Value of the receiving date.
Lending IncomeTaxable incomeCost basis: Value of the receiving date.
Margin gainTaxable margin trade income (separate table in the report and cost basis summed up in the form 8949)Cost basis: Value of the receiving date.
Definition of the taxable or not taxable event created by deposit classifications

*received gift: Theoretically you would have to take over the original cost basis of the gifted assets. The problem is, that you won’t have this information in most cases. That’s why Accointing uses the value of the receiving date (hourly prices) to define the cost basis as default. You can change it by just creating an order with the correct cost basis and buy date of the past and ignore the deposited gift instead.

**Staking income: Use this USA specific crypto tax classifications for the staking reward you get back. You cannot use this classification for the coin you use to stake.

Withdraws or Sell actions create Disposals – those are either taxable or non-taxable depending on the classification of the outgoing transaction.

This is a really important section of the USA specific crypto tax classifications in 2021. There are countries where the incoming and outgoing transactions define as a combination if the transaction is seen as taxable or non-taxable.

In the USA it’s relatively easy, here it is only important how the asset got disposed (sold, withdrawn). You will find the different crypto tax classifications for the USA and its consequences in the following table.

The Disposals are summed up in the Form 8949 and in the full tax report. Please be careful with the non-taxable disposals, they will not show up in the Form 8949. Depending on the long or shortterm holding of an asset, the taxable disposals will either show up in the first page of the Form 8949 (Shortterm) or the second page (Longterm).

The margin losses and margin fees are all summed up together with the margin gains in the fulltaxreport.pdf and use the proceeds of the transaction date to define the value. They are all summed up also in the Form 8949 but they don’t create taxable disposals, meaning when a tax lot gets closed because of a margin loss or fee it will not create a taxable disposal in the export files – it purely uses the margin gain, loss and fee proceeds to calculate the taxable gains for it.

Transactions fees of internal transactions (e.g. from your exchange to your wallet) will show up in the Full tax report pdf summed up in a separate table.

Classification type (outgoing transaction)Taxable or not taxable?Definition of Cost basisSummed up in
No classificationTaxable DisposalProceeds: Value at the date Cost basis: Buy InformationForm 8949, Full tax report
Sell tradeTaxable DisposalProceeds: Value at the date Cost basis: Buy InformationForm 8949, Full tax report
OTC trade (sell side)Taxable DisposalProceeds: Value at the date Cost basis: Buy InformationForm 8949, Full tax report
ICO trade (sell side)Taxable DisposalProceeds: Value at the date Cost basis: Buy InformationForm 8949, Full tax report
Swap (sell side)Taxable DisposalProceeds: Value at the date Cost basis: Buy InformationForm 8949, Full tax report
PaymentTaxable DisposalProceeds: Value at the date Cost basis: Buy InformationForm 8949, Full tax report
Used for gamblingTaxable DisposalProceeds: Value at the date Cost basis: Buy InformationForm 8949, Full tax report
Gift sentNot taxable disposalProceeds: Value at the date Cost basis: Buy InformationFull tax report
Lost*Not taxable disposalProceeds: Value at the date Cost basis: Buy InformationFull tax report
Remove fundsNot taxable disposalProceeds: Value at the date Cost basis: Buy InformationFull tax report
ReconcileTaxable DisposalProceeds: Value at the date Cost basis: Buy InformationForm 8949, Full tax report
FeeTaxable DisposalProceeds: Value at the date Cost basis: Buy InformationForm 8949, Full tax report
Interest paidTaxable DisposalProceeds: Value at the date Cost basis: Buy InformationForm 8949, Full tax report
Margin lossNo disposal tax, but proceeds summed up in margin table and in the Form8949Proceeds: Value at the dateForm 8949, Full tax report
Margin feeNo disposal tax, but proceeds summed up in margin table and in the Form8949Proceeds: Value at the dateForm 8949, Full tax report
Definition of the taxable or not taxable event created by withdraw classifications

*Lost coins: Accointing uses the most conservative approach here, you can also optimize your taxes by creating a loss with the Cost basis. In order to do that, just create an order that sells the lost amount and use 0,01 USD for the buy amount. That creates a loss in combination with the underlying cost basis: Proceeds of 0,01 USD – Cost basis = taxable loss

Margin loss and Margin fee in the Form 8949

A margin loss or margin fee transaction creates a loss in the Form 8949 based on the value of the asset at the date when the margin trade got closed. This “sell action” also creates a disposal because it uses a tax lot of BTC that you bought at an earlier date. The difference between the proceeds and the original cost basis would create a taxable gain in a normal sell, but because the proceeds get already summed up (for the margin loss), this disposal is considered “not tax relevant” and won’t show up in the Form 8949 (see the grey box in the picture).

Related posts

UK Specific Crypto Tax Classifications 2021
UK Specific Crypto Tax Classifications, in general, are not that easy to understand and there...
April 12, 2021
Germany Specific Crypto Tax Classifications
ACCOINTING.com provides the only Germany-specific crypto tax classifications. Taxes in general are not easy to...
April 12, 2021
Australia – Crypto Tax Classifications and Policies 2021 – ATO Guidelines
Australia specific crypto tax classifications are are not that easy to understand and there are...
August 16, 2021