Tax Implications for LPs

Earning from liquidity pools has complex tax consequences. In many jurisdictions, fees are treated as ordinary income at the time they are received. Depositing and withdrawing from a pool may be considered a taxable event, triggering capital gains. Impermanent loss can also have nuanced tax treatments. It is imperative to keep detailed records of all transactions and consult a crypto-savvy tax professional. Understanding the tax liabilities of your Uniswap activity is essential for compliance.