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Capital gain

The profit on selling property, including crypto and stock, measured as proceeds minus cost basis. Short-term if held a year or less and taxed as ordinary income; long-term if held longer and taxed at lower rates.

What is Capital gain?

The profit on selling property, including crypto and stock, measured as proceeds minus cost basis. Short-term if held a year or less and taxed as ordinary income; long-term if held longer and taxed at lower rates.

Why it matters on your return

Holding period decides the rate. A sale one day past a year qualifies for long-term rates of 0, 15, or 20 percent depending on income; a sale at 364 days is taxed as ordinary income. For active crypto traders, most gains are short-term, which is why lot selection matters.

Example

You bought 1 ETH for $2,000 on March 1 last year and sell it for $3,500 on March 2 this year. The $1,500 gain is long-term. Sell it on February 28 instead and the same gain is short-term, taxed at your ordinary rate.

Do I owe tax if I swap one crypto for another without cashing out?

Yes. A crypto-to-crypto swap is a disposal of the first asset at its fair market value, and any gain is taxable even though no dollars changed hands.

Last reviewed September 10, 2026. Tax rules change; confirm current law before acting.

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