Do wash sale rules apply to cryptocurrency?

Under current law as of TY2026, the wash-sale rule in IRC Section 1091 applies to 'stock or securities.' Most cryptocurrencies held directly are generally not treated as stock or securities for this purpose, so the rule generally has not applied to them - but the classification is asset-specific (tokenized equities and certain instruments can differ), proposals to extend Section 1091 to digital assets recur in Congress, and the IRS can challenge loss timing on other grounds. Confirm treatment for your specific asset and year.

How does NJ tax crypto differently from the federal return?

NJ taxes all crypto capital gains as ordinary income at NJ GIT rates - there is no preferential long-term capital gains rate. NJ also does not allow capital loss carryforwards: losses only offset gains in the same tax year. Excess losses disappear.

Do I need to answer 'Yes' to the digital asset question on Form 1040?

Yes. If you sold, exchanged, received, or otherwise disposed of any digital assets during the tax year, you must answer 'Yes' to the digital asset question on page 1 of Form 1040.

What if my exchange reported $0 cost basis on my 1099-DA?

Exchanges frequently report $0 basis when they do not have complete acquisition records. Your actual cost basis may be derivable from your transaction history, CSV exports, or crypto tax software. Do not accept $0 basis without checking your records first.

Cryptocurrency Tax Checklist - Documents for Crypto Filing

Section 01

Exchange Statements and Forms

All exchange statements (Coinbase, Kraken, Gemini, etc.)
All 1099-DA or 1099-B forms from exchanges
All 1099-K forms related to exchange activity (if applicable)
Crypto tax software report from Koinly, CoinTracker, CoinLedger, or equivalent
Confirm the software report reconciles to your exchange data (transaction counts should match)
Written confirmation of all exchanges, wallets, and DeFi platforms you used

Section 02

Cost Basis Information

Confirm your cost basis method: FIFO (default), Specific ID, or HIFO
Documentation of gifted crypto with donor's basis (IRC Section 1015)
Documentation of inherited crypto with date-of-death fair market value (IRC Section 1014)
Records for any zero-basis transactions that need resolution
Note: wallet-by-wallet tracking is required per Treas. Reg. §1.1012-1(j) starting TY2025 (Rev. Proc. 2024-28 is the pre-2025 allocation safe harbor)

Section 03

Transaction Records

Records of all crypto-to-crypto swaps (treated as taxable dispositions)
Transfer records between your own wallets (non-taxable, but need documentation)
Staking reward records with fair market value at time of receipt
Airdrop records with fair market value at time of receipt (per Rev. Rul. 2019-24)
Mining income records with fair market value at time of receipt
DeFi transaction records: LP entry/exit, yield farming, lending interest
NFT purchase and sale records (note: collectible NFTs may be taxed at 28% under Section 408(m))

Section 04

NJ-Specific Items

Note: NJ taxes all crypto capital gains as ordinary income (no preferential rate)
Note: NJ does not allow capital loss carryforward - losses expire in the year incurred
Note: NJ Section 179 cap for mining hardware is $25,000; NJ does not allow bonus depreciation

Section 01

Exchange Statements and Forms

All exchange statements (Coinbase, Kraken, Gemini, etc.)
All 1099-DA or 1099-B forms from exchanges
All 1099-K forms related to exchange activity (if applicable)
Crypto tax software report from Koinly, CoinTracker, CoinLedger, or equivalent
Confirm the software report reconciles to your exchange data (transaction counts should match)
Written confirmation of all exchanges, wallets, and DeFi platforms you used

Section 02

Cost Basis Information

Confirm your cost basis method: FIFO (default), Specific ID, or HIFO
Documentation of gifted crypto with donor's basis (IRC Section 1015)
Documentation of inherited crypto with date-of-death fair market value (IRC Section 1014)
Records for any zero-basis transactions that need resolution
Note: wallet-by-wallet tracking is required per Treas. Reg. §1.1012-1(j) starting TY2025 (Rev. Proc. 2024-28 is the pre-2025 allocation safe harbor)

Section 03

Transaction Records

Records of all crypto-to-crypto swaps (treated as taxable dispositions)
Transfer records between your own wallets (non-taxable, but need documentation)
Staking reward records with fair market value at time of receipt
Airdrop records with fair market value at time of receipt (per Rev. Rul. 2019-24)
Mining income records with fair market value at time of receipt
DeFi transaction records: LP entry/exit, yield farming, lending interest
NFT purchase and sale records (note: collectible NFTs may be taxed at 28% under Section 408(m))

Section 04

NJ-Specific Items

Note: NJ taxes all crypto capital gains as ordinary income (no preferential rate)
Note: NJ does not allow capital loss carryforward - losses expire in the year incurred
Note: NJ Section 179 cap for mining hardware is $25,000; NJ does not allow bonus depreciation

Cryptocurrency Tax Checklist

Quick Answer

Exchange Statements and Forms

Cost Basis Information

Transaction Records

Other Income Documents

NJ-Specific Items

Frequently Asked Questions

Related Pages

Have Your Documents Ready?

Cryptocurrency Tax Checklist

Quick Answer

Exchange Statements and Forms

Cost Basis Information

Transaction Records

Other Income Documents

NJ-Specific Items

Frequently Asked Questions

Related Pages

Have Your Documents Ready?