DeFi taxation is a maze of ambiguity. While traditional crypto taxes are straightforward, DeFi introduces complex scenarios: impermanent loss, LP tokens, yield rewards, airdrops, and cross-chain bridges.
Disclaimer
This is educational content, not tax advice. Consult a qualified tax professional.
Key Takeaways
- Every crypto-to-crypto trade is a taxable event in most jurisdictions
- Yield farming rewards are typically taxed as ordinary income
- LP positions create taxable events at entry and exit
- Impermanent loss is reflected in your exit value, not separately
- Use dedicated crypto tax software for DeFi tracking
- Keep meticulous records—you may need them years later