Crypto Taxes: What Montana Investors Need to Know
The IRS treats cryptocurrency as property, not currency. Every sale, swap, or use is a taxable event. Here's how Montana investors should approach it.
What's taxable
Selling crypto for USD.
Swapping one crypto for another (BTC for ETH is a taxable sale of BTC).
Using crypto to buy goods or services (taxable sale of the crypto).
Receiving crypto as income (mining, staking, airdrops, wages, referral bonuses) — ordinary income at fair market value when received.
What's not taxable
Buying crypto with USD.
Holding crypto.
Transferring between your own wallets.
Gifts of crypto (up to the annual gift exclusion, $18,000 in 2024).
How gain/loss is calculated
Sale proceeds minus cost basis = gain or loss.
Held over one year: long-term capital gain (0/15/20% federal + MT state tax).
Held one year or less: short-term (ordinary income rates).
Default cost-basis method is FIFO; you can specify other methods (LIFO, HIFO, specific ID) with proper record-keeping.
Reporting
Form 8949: line-by-line reporting of each disposal.
Schedule D: summary.
Form 1040 crypto question: 'At any time during the year did you receive, sell, exchange, or otherwise dispose of a digital asset?' Answer honestly — this is now on the front page for a reason.
Reconciling messy exchange activity
Use CoinTracker, Koinly, ZenLedger, or CoinLedger to aggregate exchanges, wallets, and DeFi activity into a Form 8949-ready report.
Reconcile transfers so you don't double-count.
Save the tax software export in your permanent tax file. Exchanges close, records disappear, and reconstructing 5 years later is a nightmare.
Common traps
Not reporting because 'no 1099 was issued.' The IRS doesn't need a 1099 to know.
Ignoring swaps as if they aren't sales. They are.
Staking rewards not reported as income when received.
Losing records after moving off an exchange.
A quick disclaimer
This article is general information for Montana small business owners, not tax, legal, or accounting advice for your specific situation. Rules change, and how they apply depends on facts we don't know about you. Before acting on anything you read here, talk to a qualified professional. If you're a Montana business owner and want a real conversation about your books, payroll, or tax, that's what Marlow Accounting is here for — call 406-290-1214 or schedule a discovery call.