5 Crypto Tax Tips

5 Crypto Tax Takeaways from XRP Las Vegas

CKH Group’s CEO Kate Kudrenko recently attended the XRP Las Vegas conference to immerse themselves in the evolving world of cryptocurrency and blockchain technology.

This includes recent developments, such as the U.S. House of Representatives and the U.S Senate continuing to advance federal stablecoin legislation; the STABLE Act and GENIUS Act. Both of which aim to establish federal regulatory framework for this particular form of digital asset.

As we love sharing tax and accounting tips, here are five essential crypto tax facts:

1. 1. Crypto is considered property by the IRS
   2. Wash Sale rules do not apply to crypto
   3. Cryptocurrency airdrops are taxable
   4. Certain crypto events are nontaxable
   5. Stay informed on regulatory changes and consult tax professionals

Our 5 Essential Crypto Tax Tips

1. Cryptocurrency: Property, Security, or Commodity?

One of the biggest talking points at the event revolved around how Cryptocurrency holds a unique and sometimes confusing status in the U.S. because different regulatory bodies classify it in different ways. Several discussions involved legal cases or regulations about how it is classified.

To the IRS, crypto is considered property, which means any time you sell, trade, or otherwise dispose of it, you may trigger capital gains taxes—just like with real estate. So if you buy Bitcoin for $5,000 and later sell it for $8,000, you owe taxes on that $3,000 gain. (IRS Notice 2014-21)

Meanwhile, the SEC (Securities and Exchange Commission) once claimed cryptocurrencies to be securities, especially if they were launched through something like an ICO (Initial Coin Offering). If the asset meets the criteria of the “Howey Test”—essentially, if people are investing in it with the expectation of profit from someone else’s work—it could fall under securities law.

This was especially notable in regard to the ongoing legal battle between the SEC and Ripple, with the SEC arguing that Ripple’s sales of XRP constituted as unregistered security offering, while Ripple argued that XRP is a digital currency. The SEC has officially dropped its lawsuit against Ripple, marking the end of a four-year legal battle. This decision, announced on March 19, 2025, allows Ripple to move forward without regulatory overhang, confirming that XRP is not classified as a security. 

And then there’s the CFTC (Commodity Futures Trading Commission), which views crypto as a commodity, similar to gold or oil, especially when it comes to regulating crypto futures and preventing fraud in those markets.

In short: crypto can be taxed like property, traded like a commodity or considered a collectible.

2. Wash Sale Rule Currently Does Not Apply to Crypto

The wash sale rule is an IRS regulation that prevents investors from claiming a tax deduction on a loss if they repurchase the same or substantially identical security within 30 days. Now that we’ve explained that each regulatory body classifies crypto differently, we can apply it to this real. So, since the IRS classifies cryptocurrencies as property, rather than securities, the wash sale rule does not currently apply to them.

Hence, some crypto investors can be selling underperforming assets at a loss, and offset capital gains. This strategy can be particularly beneficial in volatile markets, allowing for immediate repurchase of the same assets without penalty.  It’s important to note that this loophole may close in the future as regulatory discussions continue, and investors should be cautious and ensure that their transactions have economic substance to withstand IRS scrutiny.

3. Cryptocurrency Airdrops Are Taxable Upon Receipt

A cryptocurrency airdrop is a distribution of free tokens to wallet addresses, often used by blockchain projects as a marketing strategy to promote new coins or tokens. These airdrops can be unsolicited or may require certain actions, such as signing up for a service or holding a specific cryptocurrency. Users may have a hard time passing up the opportunity to receive free tokens, but grom a tax perspective, the IRS considers airdropped tokens as taxable income at their fair market value when you gain control over them.

This means that even if the tokens are received without any action from the recipient, they are still subject to income tax once accessible. For instance, if you receive an airdrop of tokens valued at $500, you must report this amount as “Other Income” on your tax return for that year. (Rev. Rul. 2019-24)

4. Understand Crypto’s Nontaxable Events

Now that we’ve established that the IRS can tax crypto based on certain events (selling or trading), you might be wondering if there is anything you can do with your crypto that doesn’t trigger tax liabilities. Here are examples:

• • Simply buying cryptocurrency with cash and holding onto it isn’t taxable until you sell and realize gains.
  • Donating crypto directly to a qualified 501(c)(3) nonprofit may even earn you a charitable deduction.
  • If you receive crypto as a gift, you won’t owe taxes until you sell or use it in a taxable event like staking.
  • On the flip side, giving crypto as a gift is also nontaxable up to $18,000 per recipient for 2024 (or $19,000 in 2025); gifts above that threshold require a gift tax return, though not necessarily any actual tax owed.
  • Transferring crypto between wallets or exchanges that you own isn’t considered a taxable event, as long as you’re not selling or trading—it just continues tracking your original cost basis for later use.

5. Stay Informed on Regulatory Changes and Consult Tax professionals

If we learned anything from this event, it’s that the regulatory landscape for cryptocurrency is rapidly evolving and highly complex. Staying informed about such changes is crucial for compliance and strategic planning.

With that, if you have uncertainties about regulations of your tax obligations, consulting with tax professionals experienced in digital assets is highly recommended. Given the complexities and frequent changes in cryptocurrency taxation, a professional CPA can help ensure compliance with current laws and help optimize your tax strategy.

Conclusion

Understanding both taxable and nontaxable cryptocurrency events, keeping up with cryptocurrency classifications and regulations, and knowing when to reach out to a professional are all important to successful crypto investments.

As the regulatory environment continues to evolve, staying informed and consulting with professionals can help navigate the complexities of crypto taxation.

CKH Group’s tax services are designed to preserve your wealth and reduce your tax exposure. If you’re curious about how we can support you, please connect with us online, or reach out to us directly at 1-770-495-9077 or email us at [email protected].