Under the new U.S. tax law, like-kind exchange rule will only apply to real property after December 31, 2017. Some people believe that there was a tax loophole before the new tax law becomes effective that if you exchange an cryptocurrency for another (e.g. buying XRP with BTC), you do not need to report the transaction on your tax return, instead you can treat it as a like-kind exchange with tax deferral.
I don't believe such opinion is correct. Based on IRS Notice 2014-12 Section 4 A-1, cryptocurrency is treated as property. Then in the said Notice Section 4 A-6, IRS has determined that a taxpayer needs to recognize gain or loss upon an exchange of cryptocurrency for other property. Since Cryptcurrency is treated as property, an exchange of one cryptocurrency for another cryptocurrency appears to be a taxable event when you look at IRS Notice 2014-12 Section 4 A-1 and A-4 together. In addition, IRC section 1031 like-kind exchange rule has specific restrictions. For example, certain types of property such as stocks, bonds or notes, inventory or stock in trade etc. are specifically excluded from Section 1031 treatment. Furthermore, IRS has clarified that cars are not like-kind to trucks. There is nowhere in the tax law, old or new, saying that like-kind exchange treatment applies to cryptocurrency. Therefore, anybody who does not report a gain or loss on exchange between two cryptocurrencies for any taxable year is most likely at their own risk with regard to tax reporting.