The network does not decide the tax character. What you paid for does.
Not tax advice · reviewed 25 October 2026
Lightning payments
A Lightning payment is still a movement of bitcoin. Notice 2014-21 treats bitcoin as property, so paying someone else in bitcoin can be a disposition even when the transfer feels like sending cash. Moving bitcoin to yourself is the other case. This page does not invent a de minimis dollar amount. The worksheet is a review with a tax pro.
What the records show
- Cash App’s help, read in October 2026, says Form 1099-DA can cover a bitcoin sale and a Lightning payment to a Square merchant. For 2025 it describes proceeds as net cash and says basis is not on the form. The transactions CSV is where the lot comes from. See Cash App bitcoin taxes.
- The same help says person-to-person activity and external-wallet transfers are not lines on that form. A payment to a person can still be a disposition. BasisFix keeps a BTC P2P row as a transfer and warns, rather than inventing proceeds.
- A Strike Bill Pay row spends bitcoin. Amount USD was blank in the published example, so BasisFix uses BTC Price times the bitcoin amount as proceeds. A Strike Send to your own wallet is not that row. See Strike bitcoin taxes.
- A Lightning transfer to a wallet you control is not a sale when both sides match. The rule is the same as any other self-transfer: shared id and quantity, or one candidate within three days. See self-transfers are not sales.
Routing fees and channel opens are not given their own income category here. If a row is not tagged, it is not reclassified. Mining and tagged income are on mining and node income.
Questions
Is spending bitcoin over Lightning a sale?
It can be a disposition. Notice 2014-21 treats a payment in bitcoin as a recognition event. Cash App’s help says a Lightning payment to a Square merchant can appear on Form 1099-DA. Strike bill pay spends bitcoin, and BasisFix books that row as a sale at BTC Price when no USD amount is present.
Is a Lightning transfer to yourself a sale?
Not when you can show both sides and the coins stayed yours. BasisFix matches a send and a receive that share a transaction id and quantity, or a single candidate within three days in a different account. An unmatched send is not converted into proceeds.
Does a missing 1099-DA mean the payment is not taxable?
No. Cash App’s help says person-to-person activity and transfers to an external wallet are not on the 1099-DA, and that they can still be a gain, a loss, a gift, or another event. Absence from the form is not the tax answer.