Section 1092 (straddles) defers losses on offsetting positions, and section 1259 (constructive sales) treats certain hedges of an appreciated position as a sale. Whether either reaches crypto is unsettled.
A common hedge is holding spot BTC and shorting a BTC perpetual. Under the securities rules that can be a straddle (losses deferred) or a constructive sale (gain triggered). The statutes are written for stock, securities, and actively traded personal property; crypto plausibly qualifies as the latter, and the IRS has not said. The conservative position applies the rules; the aggressive one does not.
Unsettled. Crypto may be actively traded personal property within the statute, and a full hedge of an appreciated position is exactly what section 1259 targets. We evaluate and document the position before the hedge is placed.
Source: IRC 1092; IRC 1259; No IRS guidance as of September 2026; IRS Notice 2014-21 (property treatment)
Last reviewed September 18, 2026. Tax rules change; confirm current law before acting.
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