How are gains and losses from cryptocurrency sales reported for U.S. federal income tax?

In the U.S., selling cryptocurrency, such as Bitcoin, for U.S. dollars or exchanging it for other property (including other cryptocurrencies) is a taxable event. The transaction generates a capital gain or loss, reported on IRS Form 8949 (Sales and Other Dispositions of Capital Assets) and then summarized on Schedule D (Capital Gains and Losses).