Which Taxes Apply?
Cryptocurrency is an example of “convertible virtual currency” as it can be digitally traded between users and purchased or exchanged into US Dollars and other real/virtual currencies. The sale, exchange, or use of any convertible virtual currency to pay for goods or services in a real-world transaction has tax consequences.
In the US, most cryptocurrency taxes fall into two categories: capital gains and ordinary income.
Disposal/Activity Type
Capital Gains Tax
Ordinary Income Tax
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❌ (If conditions met)
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❌ (Potential to claim capital losses)
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✅ (for creators)
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❌ (if conditions met)
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