TaxFormatter
Back to Engineering Blog
tax-tipsJanuary 5, 20261 min read

Crypto Wash Sales: What They Are & How to Report Them

Understanding the wash sale rule for cryptocurrency. Does it apply in 2025? How to flag them in your CSV.

A Wash Sale occurs when you sell a security at a loss and buy a "substantially identical" security within 30 days before or after the sale.

In the stock market, you cannot claim this loss on your taxes. But what about crypto?

The "Loophole" Debate

Currently, cryptocurrencies are treated as "property" by the IRS, not "securities." This has led many traders to believe the Wash Sale rule doesn't apply to Bitcoin or Ethereum.

Disclaimer: Tax laws are changing rapidly. Always consult a CPA.

How to Identify Wash Sales in Your Data

Even if you don't report them as wash sales, you need to track them to understand your true performance.

  1. Look for a Sell transaction with a realized loss.
  2. Check the next 30 days for a Buy transaction of the same asset.

Fixing Your Report

If your tax software is flagging wash sales incorrectly (e.g., treating wrapped ETH as identical to ETH), you may need to adjust your CSV "Type" column before importing.

Use TaxFormatter to quickly filter and flag potential wash sale transactions before sending them to your accountant.