Crypto Holding Periods: How to Tell Short-Term From Long-Term, Lot by Lot

The difference between short-term and long-term is one day. Sell a coin one day too early and the gain is taxed at your ordinary income rate. Wait a day and the same gain may be taxed at 15 percent, or even zero.

Holding periods sound simple. In crypto they are tracked per lot, per wallet, and they can be reset by transactions people do not think of as sales. Here is how the clock works.

The statutory line

Section 1222 defines short-term capital gain and loss as gain or loss from the sale or exchange of a capital asset held for not more than one year, and long-term capital gain and loss as gain or loss from a capital asset held for more than one year. Crypto held as an investment is a capital asset, as Notice 2014-21, Q&A-7, explains.

Long-term gains get the preferential rates of 0, 15 and 20 percent, with a 28 percent maximum for collectibles. Short-term gains are taxed at ordinary rates. See crypto capital gains tax rates for the brackets.

When the clock starts and stops

The IRS virtual currency FAQs (Q6) say the holding period begins on the day after you acquired the crypto and ends on the day you sell or exchange it. So for crypto bought on March 1, 2025, the holding period begins March 2, 2025. A sale on March 1, 2026 is one year exactly, which is not more than one year, so it is short-term. A sale on March 2, 2026 or later is long-term.

Use the trade date, not the date funds settle or the date you moved the coins. And for crypto received as income or in an airdrop, the FAQs (Q29) say the holding period begins the day after you received it.

Each lot has its own clock

If you bought the same coin ten times, you have ten holding periods. Which one applies to a sale depends on which units you sold, and that is governed by the identification rules in Treas. Reg. 1.1012-1(j). With a valid specific identification you choose the lot, and with it the holding period. Without one, first in, first out applies within that wallet or account, which tends to produce long-term results because older units go first.

That gives you a planning lever. If you hold both old and new lots of the same coin, you can choose long-term treatment by identifying older lots, or choose a short-term loss by identifying a recent lot that fell. See specific identification and standing orders.

What does not reset the clock

• Moving coins between your own wallets. The regulation's ordering rule expressly disregards the date units were transferred into a wallet or broker account. The coins keep their original acquisition dates. See wallet transfers.
• The 2025 wallet-by-wallet transition. Rev. Proc. 2024-28 requires that the acquisition date of a unit stay with its original basis when basis is allocated to wallets.
• Price changes. Unrealized gains and losses do not affect the holding period.

What does reset the clock

Any disposition ends one holding period, and acquiring something new starts another. In crypto, that happens more often than people realize.

• Swapping one token for another. The token you gave up is disposed of; the one you received starts a new holding period. A long-held coin swapped into a different coin loses its long-term status even though no dollars changed hands.
• Paying fees with crypto. The units used are disposed of under Treas. Reg. 1.1001-7(b)(1)(ii).
• Buying an NFT or goods with crypto. A disposition of the crypto.
• Selling and buying back. Because the wash sale rule in section 1091 is written for stock or securities, ordinary crypto sold and repurchased generally does not carry over the old holding period. The repurchased units start fresh.

Transactions without settled treatment, such as depositing tokens into a liquidity pool or a liquid staking protocol in exchange for a receipt token, raise the question of whether the holding period continues or restarts. Your position on whether those deposits are exchanges determines the answer. See liquid staking tokens and liquidity pools.

Gifts and inheritances

The FAQs (Q33) say that for crypto received as a gift, your holding period includes the donor's holding period if you are using the donor's basis to compute gain, provided you can document it. If you cannot, or if you are using fair market value to compute a loss, the holding period starts the day after you received the gift. The donor's records matter as much as yours.

Inherited crypto follows different rules for basis and holding period. See the existing guide on inherited cryptocurrency.

Income lots are short-term until they age

Staking rewards, mining rewards, airdrops and crypto received for work each create a new lot with a basis equal to the income reported and a holding period that starts the day after receipt. People who stake for years often have hundreds of small lots of different ages. Selling a mix without identification can produce a confusing blend of short-term and long-term results. Track reward lots individually and consider identifying older ones when you sell.

A worked example

You bought 1 ETH on January 10, 2025, and another on July 15, 2025, at different prices. On February 1, 2026, you sell 1 ETH.

• If you identify the January 10, 2025 lot, the holding period ran from January 11, 2025 to February 1, 2026. That is more than one year, so the result is long-term.
• If you identify the July 15, 2025 lot, the holding period is less than one year, so the result is short-term.
• With no identification, first in, first out applies within that account, so the January lot is treated as sold and the result is long-term.

Now suppose instead of selling for dollars you swapped the January ETH for another token on February 1, 2026. The ETH disposition is long-term, but the new token's holding period begins February 2, 2026. If you sell the new token in May 2026, that gain is short-term.

Selling near the line

When a position is a few weeks short of one year and carries a large gain, the arithmetic of waiting is often compelling. A $50,000 gain taxed at a 32 percent ordinary rate costs $16,000; the same gain taxed at 15 percent long-term costs $7,500. Price risk is real, and nobody should hold an asset they want to sell purely for tax reasons. But you should know what the date is worth before you decide.

The same logic runs in reverse for losses. A short-term loss offsets short-term gains first, which are taxed at ordinary rates. If you hold a losing lot and also have short-term gains, realizing the loss while it is still short-term can be more valuable than waiting.

Dates and times matter

The 2025 regulations and the IRS FAQs both talk about the date and time of acquisition and disposition. For holding period purposes the date is what counts, but the time matters for identifying which lot was sold and for valuing it. Keep both. Crypto trades around the clock, and an exchange that records trades in Coordinated Universal Time may show a different date than your local clock for a late-night trade. Use the exchange's recorded timestamp consistently.

Practical habits

• Record acquisition date and time for every lot, including income lots.
• Note one-year anniversaries for large positions before you sell.
• Think twice before swapping a long-held position into a similar token. You trade a long-term holding period for a new short-term one.
• Use a standing order that favors older lots if long-term treatment is your priority.

If you are rebuilding past years, the same rules apply retroactively. A lot you treated as long-term on a filed return must actually have been held more than one year. If it was not, that is an error worth correcting.

One day can change the rate on an entire gain. Keep the dates, and use them. See crypto record-keeping.

Frequently asked questions