Think Outside the Tax Box
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Think Outside the Tax Box
Tax Loss Harvesting with Cryptocurrency - 05-01-26
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In the Fall of 2025, Bitcoin reached an all-time high of over $120,000, since then it has fallen over 40% to under $70,000 in the first quarter of 2026. With the steep drop in the price of Bitcoin and other cryptocurrencies, a common question from taxpayers is whether they can use the current losses to offset their other income. Large investors and professionals such as Grant Cardone and Shehan Chandrasekera (Head of Tax Strategy at Cointracker) have suggested that cryptocurrency can be sold and bought back immediately to claim the tax benefits. As with most things, the answer to this is not as simple as they portray, and many commentators, influencers, and sometimes professionals, miss the intricacies of cryptocurrency taxation. Losses can be taken if a taxpayer fully exits their position, but the difficulty enters when the taxpayer would like to maintain their economic exposure to the cryptocurrency. Commentators often suggest that losses can be recognized since the wash sale rules for securities do not apply to cryptocurrency, and while this is partially true, the analysis does not end there. Tax practitioners and taxpayers must fully examine the details of the transactions in their entirety to determine whether a tax loss is deductible.
In this podcast, we go over the various ways that tax law comes into play when selling and re-buying cryptocurrency, and discuss considerations that taxpayers should know before engaging in any transactions.
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