2026 DeFi Tax Compliance: Liquidity Pools, Yield Farming, and Wrapped Tokens Strategy

This episode explores the rigorous tax compliance requirements for DeFi activities in 2026, focusing on the characterization of liquidity pool entries, yield farming income, and the tax implications of using wrapped tokens and cross-chain bridges.\n- How does the IRS characterize the exchange of assets for LP tokens in 2026?\n- Are rewards from auto-compounding yield farms taxed as ordinary income or capital gains?\n- What are the tax risks associated with bridging assets and using wrapped tokens across multiple chains?\n- How should impermanent loss be documented for year-end tax planning?\n- What role does Form 1099-DA play in reporting decentralized protocol transactions?\n- How can sub-ledger accounting prevent cost basis errors in complex DeFi portfolios?\nDigital Asset Planning is hosted by Ran Chen, EA, CFP®. He is a seasoned financial professional specializing in complex cases for high-net-worth individuals and families with international backgrounds. Unlike standard crypto commentary, this podcast focuses on the intersection of digital assets and real-world financial planning—including tax strategy, estate and legacy planning, cross-border jurisdictional issues, and risk management. We help serious asset holders move beyond speculation toward long-term responsibility and protection. For more resources, visit https://digital-asset-planning.com.