Using Bitcoin (BTC) to pay for goods or services, or exchanging it for any other asset, can create a taxable gain or loss under United States federal tax law, according to Rob Massey, the global leader of Deloitte's blockchain and digital assets tax practice. Massey made the remarks in an interview published on a Monday in October, as COINOTAG reported on October 27, 2026.

The tax exposure stems from the long-standing treatment of digital assets as property for U.S. federal income tax purposes. Because Bitcoin is classified as property rather than currency, spending or swapping it is treated as a disposal. A taxpayer who disposes of BTC must compare the asset's cost basis, generally its purchase price, with its fair market value at the time of the payment or exchange, recognizing a capital gain if the value has risen and a capital loss if it has fallen. Under U.S. rules, the character of the result also depends on the holding period, with holdings of one year or less producing short-term gains or losses and longer holdings producing long-term ones.

The practical upshot is that routine spending carries a layer of accounting that ordinary currency does not: every payment or exchange is treated as its own disposal, so the tax result turns on the market value at that specific moment rather than on the amount of Bitcoin ultimately spent.

By contrast, the IRS's frequently asked questions on virtual currency transactions spare movements between wallets or accounts controlled by the same taxpayer. Under that guidance, a transfer of digital assets between an individual's own wallets or accounts is not treated as a taxable disposal, and the taxpayer does not recognize gain or loss from the move. This treatment addresses a common point of confusion for holders who shift Bitcoin between self-custodied wallets and exchange-held addresses.

In practice, the two scenarios sit on opposite sides of the line: a customer who pays a merchant in BTC has effectively sold the Bitcoin at its market value in that moment, while the same person who later consolidates funds from an exchange into a hardware wallet has not triggered a reportable disposal.

The IRS has required individual filers to answer a digital-asset question on the Form 1040 since the 2020 tax year, reflecting the agency's ongoing focus on cryptocurrency-related reporting. For filers, the same line matters at filing time: only transactions that dispose of Bitcoin produce a gain or loss to report, while same-owner wallet moves do not.

This content was first published on COINOTAG.