A share of swap fees earned by supplying pool liquidity. Fees may accumulate in the pool or become separately claimable, depending on the protocol.
Fees are ordinary income. The timing question is when they are accessible: claimable fees are income when you can claim them; fees that accrue inside the pool and are only realized at withdrawal are, under the common position, income at withdrawal.
Income, like interest or rent. The gain or loss on the position itself, when you close it, is capital.
Source: Rev. Rul. 2023-14; IRS Notice 2014-21
Last reviewed September 18, 2026. Tax rules change; confirm current law before acting.
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