Glossary

Realized vs. unrealized gain

A realized gain occurs when you dispose of a digital asset for more than its cost basis; an unrealized gain is an increase in value on an asset you still hold and is not taxed.

How it works

A gain is realized when you dispose of an asset: sell, trade, or spend it. An increase in value on an asset you still hold is unrealized and not taxed. The same is true of losses; a decline in value is not deductible until you sell. The exception is the exit tax, which taxes covered expatriates on unrealized gains.

Why it matters

A large unrealized gain is a planning opportunity (timing, gifting, charitable giving); a large unrealized loss is a harvesting opportunity. Neither does anything on the return until it is realized.

Related: tax loss harvesting, crypto donations.

Guides that cover realized vs. unrealized gain

Related terms

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Where this comes up in our work

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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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