How do you calculate the realized gain or loss on the sale of crypto? Can you provide an example? What method should be used?

For tax purposes, crypto is either considered earned income or treated as property sales.

 

It’s treated as a property sale (with capital gains or losses) when you:

 

• Sell it (like you would stock)
• Exchange it (swap one type of crypto for another)
• Spend it (use it as payment for goods and services)
• Convert it to US dollars (sell crypto to buy regular currency)

If someone pays you in crypto and then you sell it for a profit, you'll pay taxes on the income and pay the capital gains tax.

 

The gain is calculated like selling a stock; the difference between your Cost Basis and the Sales Price, and whether it was long-term or short-term. 

 

Here's more info on How to Report Crypto as Capital Gain and How Capital Gains are Taxed.

 

Be sure to check out our new Crypto Investor Center. 

 

How do you calculate the cost basis? 

The cost basis is what you paid for the crypto.

 

@Alfonsor 

What method does the IRS accept (FIFO, HIFO, LIFO)?

 

You can use any of them. The default is FIFO if you do not choose.

Please be advised that the TurboTax Investor Center will be discontinued on July 22, 2025. Please see this FAQ for more information: How do I download my info from Investor Center?