Sold Investments or Crypto? How Your Gains Are Taxed

Each sale is reported on Form 8949 and totaled on Schedule D. The gain or loss is the sale price minus your basis (what you paid, plus certain costs). How long you held the asset decides the rate: held a year or less is short-term and taxed like wages; held more than a year is long-term and taxed at lower capital gains rates. Higher-income filers may also owe the net investment income tax.

Losses offset gains first. If losses are larger, a limited amount can offset other income each year and the rest carries forward to future years. Selling at a loss and buying the same or a substantially identical security shortly before or after can trigger the wash sale rule, which delays the loss.

The IRS treats digital assets as property. Selling for dollars, trading one coin for another, and spending crypto on goods are all taxable sales. Rewards from staking and mining, and crypto received as payment for work, are ordinary income at their value when received, and that value becomes your basis. Simply buying and holding, or moving coins between your own wallets, is not a sale.

Form 1040 asks every filer a yes or no question about digital assets, and it has to be answered honestly. When a 1099-DA shows proceeds with no basis, the return must show your actual basis from your own records or exchange history, or the full proceeds can end up taxed as gain.

One brokerage with complete basis is usually simple. Get help when there are employee stock plans, crypto across several exchanges, missing basis, inherited shares or large gains you want to plan around. We prepare the return through tax preparation and can plan the timing of future sales with tax planning; our capital gains planning article is good background. If the shares were inherited, see received an inheritance for how basis works.