Non Taxable Events

Although these are non-taxable events or activities, they can impact your tax liability:

Buying cryptocurrency

While selling cryptocurrency for fiat currency is a disposal and a capital event, buying cryptocurrency with fiat or currency is not. Although not a taxable event, it is important to record these transactions, as the purchase price or cost basis will be used to calculate gain/loss when you dispose of the cryptocurrency in the future.

Moving tokens between wallets or accounts

Moving cryptocurrency tokens between wallets or exchange accounts you own is not a taxable event, as you have not disposed of the cryptocurrency. The IRS considers capital gains and losses when you sell or exchange property, not when you move property between exchanges or wallets you own.

You should ensure that these are not logged as dispositions (which are capital events subject to potential capital gains tax) incorrectly. For example, if you withdraw cryptocurrency from Exchange A, the exchange may reflect it as a sale on a Form 1099-K or other records, because they do not know you sent it to your own wallet.

HODLing

As taxpayers do not experience a capital event until their cryptocurrency is disposed of, holding cryptocurrency is not a capital event, and as such, taxpayers do not experience a capital gain or loss while “hodling.”