How Does a Capital Gain Tax Typically Treat Impermanent Loss?
Tax treatment varies by jurisdiction, but generally, impermanent loss is not a deductible event until it is "realized." The loss is realized when the liquidity provider withdraws their tokens from the pool and the resulting portfolio value is less than the initial deposited value. At this point, the difference can often be claimed as a capital loss to offset capital gains.
Glossar
Gain
Definition ⎊ In financial markets, gain refers to the positive difference between the current value of an asset or investment and its initial cost basis.
Capital Loss
Definition ⎊ Capital loss is the quantifiable reduction in an investor's principal resulting from the disposition of an asset or the closure of a financial position at a price lower than its adjusted cost basis.