Crypto Tax Planning 101

1. Understanding Cryptocurrency Taxation

Cryptocurrencies are typically treated as property by tax authorities in many jurisdictions. This classification means:

1. Capital Gains and Losses: When you sell or trade your cryptocurrency, the difference between the purchase price (cost basis) and the selling price is considered a capital gain or loss. If the crypto is held for less than a year, it's usually taxed as a short-term gain at higher tax rates compared to long-term gains (held for more than a year).