Crypto-to-crypto swaps and US taxes

A swap is a disposal and an acquisition

Exchanging one digital asset for a materially different asset generally disposes of the first asset. Work out the USD amount realized and compare it with the adjusted basis of the units you gave up. The new asset has its own basis and acquisition record.

Keep both sides of the trade

Suppose the XRP units you exchange have a $600 basis and the amount realized is $1,000. The difference is a $400 gain before transaction-cost adjustments. Record the BTC received separately; a later sale of that BTC is another calculation.

Do not double-count swap costs

The current digital-asset FAQs contain specific rules for allocating transaction costs. Save the trade confirmation and identify fees paid in cash separately from fees paid with an asset. A fee paid in crypto may itself dispose of units.

• Save execution time and USD valuation source.
• Keep the transaction hash and exchange order ID.
• Reconcile quantities and cost basis with the receiving wallet.

Keep exploring