Glossary

Holding period

The holding period is the time between acquiring a digital asset and disposing of it; one year or less makes the gain or loss short-term, taxed at ordinary rates, and more than one year makes it long-term.

How it works

The holding period runs from the day after you acquire a specific unit to the day you dispose of it. One year or less is short-term, taxed at ordinary rates; more than one year is long-term, taxed at 0, 15, or 20 percent. Received crypto starts a new holding period at receipt. Gifts generally carry over the giver’s holding period; inherited assets are automatically long-term.

Why it matters

Because the period is measured per unit, the cost basis method decides which units you sold and therefore whether the gain is short or long term. Selling a few days too early can double the tax rate.

Related: specific identification, capital gains.

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Definitions are general information, not legal advice, and may not reflect the most recent changes in law.

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