Not every digital asset transaction requires you to tick the yes box. For example, just holding a digital asset in a wallet or account, or transferring a digital asset from one wallet or account you own or control to another wallet or account that you own or control doesn’t result in a yes. It also doesn't include the purchase of digital assets using cash or other currency, including through the use of electronic platforms like PayPalDo not leave the question unanswered.
If you buy and sell cryptocurrency as an investment, you'll calculate gains and losses the same way you buy and sell stock. For tax purposes, you figure your capital gains or losses by determining how much your basis—typically, the cost you pay for assets—has gone up or down from the time that you acquired the asset until there’s a taxable event. A taxable event can include a sale, gift, or other disposition.
And while cryptocurrency goes up and down, you care the most about the beginning and the end—what happens in the middle doesn't really count. That’s because, for tax purposes, when cryptocurrency takes a dive, that doesn't equal a realized loss. Similarly, when it goes back up in value, that doesn't equal a realized gain. To realize a gain or a loss for tax purposes, you must do something with the asset, like sell or otherwise dispose of it.