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Worked example

Crypto Tax Example: A Long-Term Sale and a Short-Term Swap

Cam, a fictional single filer, sold bitcoin for cash and swapped ether for another token during 2026. The exchange did not produce cash, so Cam wants to see why it still enters the disposition estimate. This is an illustrative 2026 scenario, not personal tax advice.

9 minute read · 2026 U.S. federal tax

Follow the numbers

Reconcile basis, value, fees, dates

A digital asset moving from acquisition and cost basis through a dated holding period to a taxable cash sale or token swap.
  1. 1Identify disposition
  2. 2Reconcile basis, value, fees, dates
  3. 3Aggregate short- and long-term results
Reconcile basis, value, fees, dates is the editorial focus of this worked example.
Visual summary: A digital asset moving from acquisition and cost basis through a dated holding period to a taxable cash sale or token swap. This page highlights: Reconcile basis, value, fees, dates.

The planning question behind the numbers

Cam, a fictional single filer, sold bitcoin for cash and swapped ether for another token during 2026.

The exchange did not produce cash, so Cam wants to see why it still enters the disposition estimate. The filing-status context is Single, and every tax value uses the 2026 production calculation.

Scenario profile

The exchange did not produce cash, so Cam wants to see why it still enters the disposition estimate.

Cam, a fictional single filer, sold bitcoin for cash and swapped ether for another token during 2026.

Single

Prepared inputs, grouped by role

Tax context

  • $72,000 ordinary taxable income before capital activity
  • $2,000 of other current short-term gains
  • $1,000 short-term loss carryover

Dispositions

  • BTC sale: dates, $18,000 value, $120 fee, $9,500 basis
  • ETH swap: dates, $7,200 value, $60 fee, $8,400 basis
A fictional planning profile keeps the calculation concrete without implying personal advice.
Visual summary: Cam, a fictional single filer, sold bitcoin for cash and swapped ether for another token during 2026. Filing-status context: Single. Inputs: $72,000 ordinary taxable income before capital activity; $2,000 of other current short-term gains; $1,000 short-term loss carryover; BTC sale: dates, $18,000 value, $120 fee, $9,500 basis; ETH swap: dates, $7,200 value, $60 fee, $8,400 basis.

Inputs the fictional taxpayer has prepared

The scenario uses the same inputs accepted by the calculator. No deduction, credit, basis amount, or eligibility conclusion is created inside the example.

  • $72,000 ordinary taxable income before capital activity
  • $2,000 of other current short-term gains
  • $1,000 short-term loss carryover
  • BTC sale: dates, $18,000 value, $120 fee, $9,500 basis
  • ETH swap: dates, $7,200 value, $60 fee, $8,400 basis

Follow the calculation from input to result

TaxArith passes the fixture through calculateCryptoTax. The values below use the site’s production formatting.

Production calculation journey

Values are generated by calculateCryptoTax.

calculateCryptoTax

  1. 1. Crypto long-term gains$8,380.00
  2. 2. Crypto short-term losses$1,260.00
  3. 3. Net crypto gain or loss$7,120.00
  4. 4. Federal tax before crypto activity$10,772.00
  5. 5. Federal tax with crypto activity$11,770.00
  6. 6. Estimated federal income-tax impact$998.00
Each disposition keeps its date-based holding period before it joins other capital activity. The swap’s fair market value is treated as proceeds even without a cash receipt.
Visual summary: Crypto long-term gains: 8380; Crypto short-term losses: 1260; Net crypto gain or loss: 7120; Federal tax before crypto activity: 10772; Federal tax with crypto activity: 11770; Estimated federal income-tax impact: 998

Each disposition keeps its date-based holding period before it joins other capital activity. The swap’s fair market value is treated as proceeds even without a cash receipt.

Change one input and watch the consequence

If there is no entering short-term loss carryover:

Base case versus one changed input

If there is no entering short-term loss carryover

Base case

Estimated federal income-tax impact

$998.00

One-input change

Alternative tax impact

$979.80
Numeric change−$18.20

If there is no entering short-term loss carryover

A carryover belongs in the scenario only when supported by the prior return’s worksheet.
Visual summary: Estimated federal income-tax impact: 998. Alternative tax impact: 979.7999999999993.

A carryover belongs in the scenario only when supported by the prior return’s worksheet.

Before you use the estimate

  • Recreate the example only with records that support your own inputs.
  • Keep the same filing status and tax year when comparing the published numbers.
  • Change one material input at a time and read the full breakdown.
  • Review the stated limitations before using the estimate.

Where this estimate stops

  • The model does not import lots, identify taxable events, value property, account for income from mining or staking, or prepare Form 8949.
  • The fictional facts illustrate production logic and do not establish eligibility, filing treatment, or a recommended action for any reader.

Sources and references

Only the primary federal sources used for the rules discussed in this guide are listed here.

  • Digital assets

    Internal Revenue Service · The federal treatment and reporting context for digital-asset transactions.

  • Frequently asked questions on digital asset transactions

    Internal Revenue Service · Sale, exchange, transfer, basis, and fair-market-value distinctions discussed in the guide.

  • Topic No. 409, Capital Gains and Losses

    Internal Revenue Service · General capital gain and loss character, netting, the annual capital-loss deduction, and carryover treatment.

  • Revenue Procedure 2025-32

    Internal Revenue Service · The inflation-adjusted 2026 ordinary brackets, standard deductions, preferential-rate thresholds, and other indexed amounts used by the applicable calculation.

TaxArith provides illustrative 2026 U.S. federal tax estimates for general information. It is not tax, legal, financial, or investment advice and does not prepare or file a return. Results depend on the accuracy and completeness of the submitted facts.