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Bitcoin and Taxes: A Guide to the Tax Rules on Owning Cryptocurrency

Bitcoin and Taxes: A Guide to the Tax Rules on Owning Cryptocurrency



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5 Comments

  1. Definitely only specific to US-based traders. Hodlers in any country don’t care about tax laws NOW, cause we’re definitely not selling NOW! The citadel will be built using Bitcoin, and the land will be purchased using Bitcoin. The well will be dug with a machine, rented using Bitcoin. The pecan scions will get shipped across the country, but the payment will be done digitally with Bitcoin. I can’t wait until I have my orchard.

  2. What’s the proper way to handle **fees** paid for various crypto transactions, if you don’t lose everything in a boating accident? If, say, I was charged network fee in ETH, does that count as “spending” the ETH? If yes, then, because spending crypto is a taxable event, presumably I’d have to keep track of the USD value of that fee and report capital gains on the amount? Do people actually do this?

    In a completely made up example, say I bought 100 ETH for $100, Then the value goes up and now my 100 ETH is worth $200000. So I have unrealized gains of $199900. Now I do some fancy maneuvers and pay 1ETH in fees. In theory that 1ETH was equivalent to unrealized gains of $1999. So when I spent the 1ETH in fees, did I realize those gains? Do I owe taxes on the $1999 in “capital gains”?

    Instead, I could also just pretend I never had that ETH to begin with, and use only the rest to calculate capital gains. But that doesn’t seem quite right and certainly wouldn’t make my ledger work out properly. If you just ignore the fees, then as you accumulate fees over time it can amount to quite a bit of “lost data”. If you don’t report having paid those fees, wouldn’t the IRS just think that you still hold those amounts?

  3. It looks like this post is about taxes. Tax laws vary between countries, so you may get more helpful replies if you specify the place you are asking about.

    Please note that Rule #4 does not allow for Tax Evasion. This is [a site wide rule](https://www.redditinc.com/policies/content-policy) and [a subreddit rule](https://www.reddit.com/r/CryptoCurrency/about/rules/). Do not endorse, suggest, advocate, instruct others, or ask for help with tax evasion. Do not be coy and sarcastically recommend against it or suggest using a privacy coin in response to an IRS inquiry.

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