Chapter 2: Taxable vs. Non-Taxable Events

Not every Bitcoin transaction triggers a tax bill. Understanding the difference between taxable and non-taxable events is crucial for planning.

Taxable Events

• Selling crypto for fiat: Converting Bitcoin to USD triggers capital gains/losses
• Trading crypto for crypto: Swapping BTC for ETH is a taxable event
• Spending crypto: Buying a coffee with Bitcoin triggers capital gains
• Receiving crypto as payment: Income tax applies at fair market value
• Mining rewards: Taxed as ordinary income when received
• Staking rewards: Taxed as ordinary income when received

Non-Taxable Events

• Buying crypto with fiat: No tax when you purchase
• Transferring between your own wallets: Moving BTC from Coinbase to Ledger is not taxable
• Gifting crypto (under $17,000): No tax for giver or recipient
• Donating to charity: May qualify for tax deduction
• Holding: Simply owning Bitcoin is not a taxable event