Crypto Tax Dictionary

Canada's method for calculating the average cost of all identical crypto units held, used to determine capital gains.

Recording the original purchase price of every crypto asset to accurately calculate gains or losses upon disposal.

Methods like FIFO, LIFO, and HIFO used to calculate the cost of sold crypto, directly impacting taxable gains.

Rules determining which acquisition is matched against a disposal for capital gains purposes, particularly HMRC's same-day and 30-day priority rules.

The rate used to convert cryptocurrency values into local fiat currency for tax reporting purposes.

The price an asset would sell for on the open market; the benchmark used for calculating crypto income and gains globally.

First In, First Out — treats the oldest coins as sold first; commonly required or preferred by tax authorities globally.

Transaction fees paid on Ethereum and other blockchains; may be deductible as transaction costs when calculating net gains.

Highest In, First Out — sells the highest-cost coins first to minimise taxable gains; permitted in the US with specific identification.

An accounting method that values assets at current market price, potentially treating unrealised gains and losses as taxable.

Matching all on-chain transactions against records to produce a complete, accurate set of data for tax reporting.

Only realised gains from actual disposals are typically taxable; unrealised gains from price appreciation exist only on paper.

Choosing exactly which units of crypto are sold to optimise the cost basis used for each disposal.

The method of determining the taxable value of staking rewards at the time of receipt, typically using the spot market price.

How digital tokens are categorised for accounting purposes — as intangible assets, financial instruments, or inventory — affecting their measurement and reporting.

An accounting entry recording the decline in value of crypto assets held below their original cost, before any actual disposal.

A cost basis method that averages the total cost of all holdings of an asset to determine the per-unit cost for gains calculations.

When a blockchain diverges into two chains; the tax treatment of resulting coins varies by jurisdiction.

Protocols enabling cryptocurrency transfer between different blockchains; bridging may constitute a taxable swap in most jurisdictions.

Token or treasury distributions made by decentralised autonomous organisations to members, typically taxable as ordinary income.

Financial services built on blockchain protocols without centralised intermediaries, creating unique and evolving tax challenges.

Returns earned from providing liquidity or lending in DeFi protocols; typically taxed as income when received.

Uncollateralised DeFi loans that must be borrowed and repaid within a single blockchain transaction; any profit may be taxable.

Tokens that grant holders voting rights over DeFi protocol decisions; receiving them as rewards is typically taxable income.

A permanent blockchain split; new coins received post-fork are typically treated as taxable income at fair market value.

The temporary loss in value experienced by liquidity providers when the price of deposited tokens changes relative to when they were deposited.

LP tokens received when providing liquidity to DeFi pools; tax treatment on deposit, swap, and withdrawal is still evolving.

Tax treatment of virtual land, wearables, and in-game assets purchased or earned in blockchain-based metaverse platforms.

Tax treatment of non-fungible tokens; buying, selling, and creating NFTs may each trigger separate taxable events.

The process of using already-staked assets (like stETH) as collateral in additional staking or DeFi protocols to earn layered yields.

Transactions executed by interacting with self-executing blockchain contracts; each interaction may create a distinct taxable event.

The scheduled release of cryptocurrency tokens to founders, employees, or investors over time — each vesting event is typically a taxable income moment.

Tokens representing another asset on a different chain (e.g. WBTC); wrapping or unwrapping may constitute a taxable swap.

Cryptographic method enabling transaction verification without revealing underlying data; emerging compliance implications in privacy coins.

Crypto received via airdrop is typically treated as ordinary income at fair market value on the date of receipt.

Australia's 50% capital gains tax discount for assets held longer than 12 months before disposal.

Revenue from mining cryptocurrency, generally taxed as ordinary income at fair market value on the date received.

Cryptocurrency received as a result of a blockchain hard fork, typically treated as ordinary income at fair market value on receipt.

Distributing crypto income or gains between spouses or family members to reduce the household tax bill using lower-rate brackets.

Gains on crypto held beyond the qualifying holding period, taxed at preferential lower rates in many jurisdictions.

Cryptocurrency or NFT rewards earned through blockchain gaming, taxable as income at fair market value when received.

Block rewards earned by staking crypto on PoS networks; generally taxable as income at point of receipt.

Cryptocurrency received as a reward for referring new users to an exchange or platform, taxable as ordinary income.

Ongoing crypto payments received by NFT creators each time their work is resold on a secondary market.

Indian income tax provision taxing VDA income at a flat 30% with no deductions permitted except cost of acquisition.

Gains on crypto held below the qualifying holding period, taxed at higher ordinary income rates.

Rewards earned by validating transactions on a Proof of Stake network, treated as ordinary income when received.

Income earned by operating a blockchain validator node, typically taxed as ordinary income or business income depending on scale.

Laws requiring exchanges and financial institutions to monitor and report suspicious crypto transactions across all major jurisdictions.

How tax authorities categorise digital assets — as property, currency, commodity, or security — directly affects tax treatment.

The concept of who truly owns and controls crypto assets, regardless of whose name a wallet or account is registered in.

OECD's Crypto-Asset Reporting Framework requiring crypto service providers to report user data to national tax authorities for international exchange.

EU directive requiring crypto service providers to report user transaction data to tax authorities across all EU member states.

FATF requirement for crypto service providers to share sender and recipient information when transferring virtual assets above threshold values.

US requirement for citizens and residents to report foreign financial accounts exceeding $10,000 to FinCEN; crypto applicability is debated.

New IRS form requiring US crypto brokers to report customer transaction data to the IRS and taxpayers from 2025 onwards.

HMRC's official guidance treating crypto as a capital asset with unique pooling rules for UK taxpayers.

IRS guidance document answering common questions about the US tax treatment of cryptocurrency transactions.

Know Your Customer rules requiring exchanges to verify user identity; integral to AML compliance for crypto globally.

The EU's Markets in Crypto-Assets regulation — the world's first comprehensive legal framework governing crypto issuance and service providers across all 27 EU member states.

Regulatory requirements preventing crypto transactions with sanctioned individuals, entities, or jurisdictions.

1% tax deducted at source on crypto transfers in India above threshold values, applicable to exchanges and buyers.

The country in which a person is considered a tax resident determines which jurisdiction's crypto tax rules apply.

The requirement for crypto exchanges and service providers to register with national regulators to operate legally.

India's legal term for cryptocurrency as defined in the Finance Act 2022; subject to 30% flat tax under Section 115BBH.

A corrected tax return filed to fix errors or omissions in a previously submitted return, including unreported crypto transactions.

A complete, chronological record of all crypto transactions maintained to substantiate tax return positions in the event of an audit.

The requirement to report the original acquisition cost of crypto assets when calculating and disclosing capital gains to tax authorities.

The annual filing and payment deadlines for declaring cryptocurrency gains and income to tax authorities across jurisdictions.

Purpose-built platforms that import crypto transaction data, calculate gains and income, and generate tax reports.

IRS form used to report capital gains and losses from the sale or exchange of capital assets including cryptocurrency.

The problem arising when original acquisition costs for crypto assets cannot be determined, leading to potentially inflated tax bills.

All transactions recorded on a public blockchain, used by tax authorities to reconstruct and audit taxpayer activity.

Peer-to-peer crypto transfers outside regulated exchanges still constitute taxable events and are subject to reporting obligations.

A report that matches all on-chain and exchange transactions against records to produce a verified, complete dataset for tax reporting.

The minimum level of crypto income or gains that must be reported to tax authorities; varies significantly by jurisdiction.

IRS form summarising total capital gains and losses from all asset sales, including crypto, for a US tax year.

The taxpayer-led process of declaring all crypto income and gains to the tax authority, applicable in UK, India, and Australia.

The practice of tracking each individual purchase of a crypto asset as a separate lot with its own cost basis and acquisition date.

Complete record of all crypto buys, sells, transfers, and income events required for accurate tax computation.

HMRC's 30-day rule preventing artificial loss creation by matching a crypto sale and repurchase within 30 days.

Tax on profit from the sale or disposal of a capital asset, including cryptocurrency in most jurisdictions.

Unused capital losses carried into future tax years to offset future gains and reduce tax liability.

Donating crypto directly to a qualified charity can eliminate capital gains and may provide a fair-market-value deduction.

Rules determining when gifting cryptocurrency triggers a tax obligation for the giver, the recipient, or both.

Tax treatment of interest earned and collateral deposited when lending or borrowing cryptocurrency.

Income tax on wages or salaries paid in cryptocurrency, assessed at fair market value on the date of receipt.

Trading one cryptocurrency for another triggers a taxable disposal event in most jurisdictions, requiring gains calculation.

Any transaction that triggers a capital gains calculation — selling, swapping, spending, or gifting crypto.

US and Canadian requirements to disclose foreign-held financial accounts and assets, which may apply to offshore crypto holdings.

Tax obligations that arise when cryptocurrency is passed to heirs upon the death of the owner.

A former tax deferral mechanism for exchanging similar assets; definitively closed for cryptocurrency after the 2017 Tax Cuts and Jobs Act.

Selling crypto at a loss to offset capital gains and reduce overall tax liability before year-end.

HMRC's method of averaging the cost of all identical cryptocurrency holdings into a single pool to calculate gains on disposal.

Swapping into or out of stablecoins is a taxable disposal event despite their perceived price stability.

Applying losses from the current tax year against income from prior years to generate a refund.

The annual amount of capital gains or income a taxpayer can realise before tax becomes payable — varies significantly by jurisdiction.

The uncertain tax treatment of sending cryptocurrency to an unspendable address, permanently removing it from circulation.

IRS rule disallowing a tax loss if you repurchase the same asset within 30 days; crypto applicability is debated.

Strategies implemented before the tax year closes to optimise gains, harvest losses, and minimise liability.