According to CoinMeta, a senior ETF analyst at Bloomberg, Eric Balchunas stated that when converting Bitcoin into spot Bitcoin ETF shares in physical form, investors do not recognize capital gains immediately; the original cost base and holding period are continued. This mechanism is essentially a deferral of taxation rather than tax avoidance, and it applies to the grantor's trust structure. Tax professionals Clinton Donnelly added that contributing Bitcoin in physical form to IBIT generally does not constitute a taxable event, but this determination depends on the grantor's trust status under IBIT. The U.S. Internal Revenue Service (IRS) has not yet made an official ruling on this matter.