SushiSwap Taxes Guide

21 Oct, 2021 · 3 min read

SushiSwap taxes are easy to do when you know what the reporting requirements look like, the tax implications of trading crypto in a decentralized exchange, and you have the tools available to help you become tax compliant.

SushiSwap is the 2nd largest decentralized exchange (DEX) in the market by daily volume, with only one year of existence, becoming one of the most popular brands in crypto.

Decentralized exchanges such as Uniswap and SushiSwap bring more flexibility and anonymity to traders and businesses, but the tax obligations in the US remain.

Let’s find out how to do your SushiSwap taxes.

How is SushiSwap taxed?

SushiSwap trades are taxed the same as any crypto-to-crypto trades in the US. All crypto-to-crypto and crypto-to-FIAT trades in the US are taxable events. Using SushiSwap, you swap one token for another token, which is a crypto to crypto trade, classified by the IRS as a taxable event.

You’ll need to calculate your capital gain/loss on the crypto-to-crypto trade by determining your cost basis at the time you purchased the original cryptocurrency. The difference between the sales proceeds and the cost basis gives you the capital gain/loss on the trade.

Find out more details about taxes in crypto trades.

Do you have to pay taxes on decentralized exchanges?

Even though SushiSwap and other decentralized exchanges offer anonymity to its users, it doesn’t change the taxable events occurring when using such exchanges.

If you use other popular DEXes as Uniswap, the need for crypto tax reporting is the same. So, yes, you have to pay taxes when using decentralized exchanges to trade crypto.

Sign-up to CoinTracking today!

DeFi Taxes: Do you pay taxes on decentralized finance?

Decentralized Finance (DeFi) includes a wide range of crypto activities beyond crypto trading. These include staking rewards, gaining interest, taking crypto loans, joining a liquidity pool, and many others.

Any crypto trades you make in a DeFi protocol will be a taxable event, resulting in capital gains. Also, other operations such as gaining interest in crypto or receiving crypto staking regards will add to your total taxable income for the year.

The tax treatment of liquidity pools is still new, whether you gain new tokens from flexible or locked savings vehicles. We encourage you to check our complete guide to DeFi taxes to clarify those questions.

How do I report SushiSwap on my taxes?

Any crypto-to-crypto gain needs to be reported in your yearly tax returns. Income gained from crypto investment vehicles, such as earning interest, getting paid in Bitcoin, or receiving staking rewards, should also be reported in your income tax returns.

Different crypto operations lead to distinct taxable events. If you use a DEX like SushiSwap, you need to determine each gain/loss on your trades and report them on Form 8949 and Schedule D of your Form 1040.

Find out more details on how to report crypto in your taxes.

Can the IRS track DeFi?

Yes. The IRS can track many of your online crypto activities with in-house and external resources (e.g., Chainalysis). Recently, many crypto investors received IRS letters with high amounts of taxes due from previous years caused by not reporting their crypto trading gains/losses.

Even though decentralized exchange and DeFi protocols offer more anonymity to users, the IRS can still communicate with exchanges and other centralized platforms to connect the dots.

Moreover, even if the IRS didn’t track/communicate with other parties, you would still be obliged to follow the tax code and report your trades.

How to do your SushiSwap taxes?

  1. Import your SushiSwap trades with CoinTracking’s ETH+DEX importer.
  2. Determine the capital gains on your DeFi trades with an approved accounting method.
  3. Generate compliant tax reports.

Learn how to import your SushiSwap trades into CoinTracking for taxes:

The best SushiSwap tax software: CoinTracking

CoinTracking is the best SushiSwap tax software in the market, enabling you to easily import your DEX trades like SushiSwap and have your gains automatically calculated while generating all the necessary tax reports.

If you’re using an Ethereum-based DEX, you can easily import your trades in a few minutes with our ETH+DEX importer. After importing your trades, you can select one of the 12 accounting methods that CoinTracking supports, and we will calculate your gains for each trade while generating the tax reports.

If you’re in Australia, Canada, the UK, or Germany, our software fully supports the different accounting methods used in those countries to generate compliant reports.

SushiSwap Taxes with no errors: CoinTracking Full Service in the US.

CoinTracking also offers a full service where a crypto expert accountant will review your account, fix any errors, and ensure you submit your returns error-free.

Full Service is currently available in the US, Australia, and some European countries. Find out all the details here.

This post is part of the Crypto Taxes AMA series. Follow our weekly AMAs on Twitter where our expert CPA, Sharon Yip answers your crypto tax questions. You can download 30+ AMA crypto tax reports for free.

Disclaimer: All the information provided above is for informational purposes only and should not be considered as professional investment, legal, or tax advice. You should conduct your own research or consult with a professional financial advisor when investing.

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Moritz Nold: Crypto Tax Manager
Crypto Tax Manager
Tax Expert, Webinar-Host, Content Creator, Crypto Enthusiast and Investor. Interested in everything regarding the crypto space.
Tax Expert, Webinar-Host, Content Creator, Crypto Enthusiast and Investor. Interested in everything regarding the crypto space.


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