The 'Swap' category applies to transactions where assets are exchanged for one another, and these can be considered non-taxable under specific circumstances. Some scenarios where users could possibly find this category applicable include:
A token has migrated to a new contract.
A token has changed its ticker name.
A token has been ‘wrapped’ or ‘unwrapped’.
A token has been deposited into a DeFi protocol, and a ‘Receipt Token’ has been issued.
IMPORTANT: Please note that the concept of a non-taxable ‘Swap’ may not be relevant in your tax jurisdiction, and it is extremely important to discuss this category with a tax professional. The above scenarios may not be considered non-taxable events in your situation or jurisdiction.
‘Swap’ Category vs ‘Treat Crypto-to-Crypto Trade as Non-Taxable’ Toggle
Feature | Impact | What It Does | When To Use It |
Category: | Only the transaction categorized as “Swap” | Transfers the cost basis and purchase date from the original asset to the new one | Use for specific trades you want to treat as non-taxable (e.g., You want to treat ETH to WETH trades as non-taxable but all other trades remain taxable) |
All crypto-to-crypto “Trade” transactions | Treats all crypto-to-crypto trades as non-taxable disposals | Use if your tax laws consider all crypto trades as non-taxable |
How does the ‘Swap’ category work?
The ‘Swap’ category works by assigning the cost basis and purchase date of the original asset to the new one. For example, If you purchased 1 BTC on the 1st of January 2022 for $45,000, then this asset would be assigned that cost basis, and the holding period would start on the date of purchase. Let's say the transactions are shown below:
Date | Transaction | Market Value |
January 1 | Buy 1 BTC | $45,000 |
April 1 | Wrap 1 BTC for 1 WBTC | $49,000 |
The category you used for the transaction on April 1 will result in different calculations.
Category | WBTC Holding Period | Cost Basis of WBTC | Capital Gain |
Trade | April 1 | $49,000 | $4,000 |
Swap | January 1 | $45,000 | $0 |
How to Apply the 'Swap' Category
1. Categorize it in-app
Crypto Tax Calculator (CTC) does not auto-categorize 'swap' transactions due to the complicated tax perspective involved. If you decide to have a ‘Trade’ to be categorized as a non-taxable 'swap', then you can do the following to re-categorize it. Remember to discuss the use of this category with a tax professional before making any changes to your transactions.
(1) Find the trade you want to recategorize:
(2) Click ‘Trade’, and then select ‘Swap’:
(3) Allow the calculations to update. You can see the calculations are now different.
If you have multiple 'trades' to recategorize, you can check the boxes on the left-hand side of the transactions and bulk edit them.
Check this guide for more details about bulk editing.
2. Importing Swap Transactions Using a Custom CSV File
If you import your transactions via custom CSV, you can follow the custom CSV guide and import your swap transactions directly via CSV without changing them in-app.
Still need help?
If you have any questions or need help, we're here for you! Feel free to reach out to us via the in-app chat in the bottom-right corner or send your inquiries to [email protected].