Just Hodl Or Sell High

The IRS essentially wants an investor to bear some economic risk for the sale — meaning some risk of loss, Levine said.

Investors who hit the bitcoin sell button and buy it back a second later risk the IRS negating the tax benefit. But the timing isn’t black-and-white.

“Time is always your best argument,” Levine said. “But given the volatility, and the fact it’s constantly trading, I think you have much more flexibility with crypto than you do with anything else.

“A day is more than sufficient,” he added. “I’d feel comfortable defending that to the IRS.”